Equity-Linked Saving Scheme (ELSS) is a type of mutual fund in India that invests primarily in equities or stocks and has a lock-in period of three years. ELSS is considered as one of the popular investment options for individuals looking to save taxes under Section 80C of the Indian Income Tax Act, as it allows them to claim deductions of up to INR 1.5 Lakhs in a financial year.
ELSS funds offer the potential for higher returns compared to traditional fixed deposit or debt-oriented investments, but with higher risk due to their exposure to equities. It is recommended to consult a financial advisor for guidance on the suitability of ELSS for your specific investment needs and risk tolerance.
Additionally, it is important to consider factors such as fund performance, expense ratio, portfolio diversification, and the fund manager’s track record before investing in ELSS. It is also crucial to have a long-term investment horizon and to remain invested for the full lock-in period to maximize returns from ELSS investments.