With less than 20 days to go before the current financial year ends, markets are providing a great opportunity and probably a last chance to those who have not planned their taxes yet.
Nifty today @ ~10,300 has dropped about 850 points over the last few months and is almost at the same level as it was in Oct 2017. This significant dip has made some of the best mutual funds available at discounted prices and presents a buying opportunity for those who had missed the chance earlier.
How can you take advantage of the opportunity?
Your best option to make the most of the market fall is to invest in tax saving mutual funds also known as Equity Linked Saving Schemes (ELSS). Since the returns are linked to the market you will end up investing at ~9% lower values and increase your chances of better returns.
|Fund Name||Current NAV|
(as on 9 Mar 2018)
|Axis Long Term Equity Fund||40.30||40.10|
(as on 1 Nov 2017)
|IDFC Tax Advantage Fund||56.29||56.27|
(as on 3 Nov 2017)
|DSP Blackrock Tax Saver Fund||44.74||44.75|
(as on 1 Aug 2017)
How does ELSS score over its peers?
- Shortest Lock-in: Among all the eligible investments in section 80C, ELSS has the lowest lock-in period of 3 years. (PPF – 15 years, NSC – 5 years, Post office – 5 years, FD – 5 years, ULIP – 5 years).
- Higher returns: Average ELSS funds have generated healthy returns of ~12-15% annually over the long-term while some of them have given 20%. Whereas the returns in fixed income alternatives like PPF have been decreasing and currently stand at 7.6%.
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