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ELSS funds – Invest Online





They offer the twin benefits of tax deduction and capital appreciation. Here are a few things you should know before you invest in these tax-saving funds.

 

1 How much is the risk?

ELSS funds are essentially diversified equity funds and carry the same risks. In fact, the risk is higher in ELSS funds because you cannot exit before three years. However, the average ELSS fund has performed better than the average diversified equity fund in the past five years. While the ELLS category has given 15.2% annualised returns, the diversified funds have given 14.3%. This is partly because a large number of equity diversified funds pull down the average returns. However, not all ELSS funds have performed so well. While the best performing ELSS fund has given 21.7% annualised return in the past five years, the worst performer has given only 3.8%.

So, choosing the right fund is crucial.

Turn to page 22 to know the best performing funds in this category.

2 What is the taxability?

ELSS funds fall under the exempt exempt-exempt (EEE) category.
Investments get tax deduction under Section 80C, so you don't have to pay tax on the amount invested in the ELSS fund.

The capital gains generated by the fund are also exempt from tax as the investments are not withdrawn. Finally, withdrawals are also tax-free because there is no tax payable on long-term capital gains from equity-oriented mutual funds. Since the holding period necessarily exceeds one year, there is no capital gains tax. The Employee Provident Fund and the Public Provident Fund are the only other investment options that enjoy the EEE tax treatment.

3 What is the lock-in period?

All tax-saving investments have lock-in periods ranging from three to 15 years. ELSS funds have a lock-in period of three years, the shortest among all Section 80C investment options. While this reduces liquidity and prevents the investor from making changes, it can be a blessing in disguise. It also means that redemptions are not a worry for the fund manager and he can take long-term investment decisions, which generally prove beneficial for the fund. For the investors who take the SIP route, each monthly instalment is treated as a separate investment and gets locked in for three years. So, the SIP started in July 2014 will be eligible for withdrawal in July 2017. Similarly, the SIP invested in August 2014 will be open for withdrawal only in August 2017.

4 Growth or dividend?

You can opt for the growth, dividend or dividend reinvestment plan. The growth plan is the cumulative option under which your investment will keep growing till you redeem it. In the dividend plan, the fund gives some amount back to if the fund's NAV has risen.

The dividend received by the investor are tax free. Don't make the mistake of opting for the dividend reinvestment plan, under which the dividend pay out is reinvested to buy more units of the scheme. Every time this happens, the new units get locked in for another three years. So when you want to exit, there will always be some units still locked in. If you are stuck in the dividend reinvestment plan, you can write to the fund house and shift to the dividend pay out plan.

5 What is the threshold?

Most equity funds have a minimum investment limit of `5,000, but ELSS funds have a lower threshold of `500.

Newbie investors who want to test the waters before jumping in will find this especially useful. These funds also offer a greater flexibility to investors. Unlike an insurance plan or a unit-linked insurance plan (Ulip), you don't have to commit multi-year investments. Even a one-time investment of `500 can be held till perpetuity. In the PPF, the investor must make at least one contribution in a year or pay a penalty.

However, there is no such compulsion in ELSS funds.

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

Leave a missed Call on 94 8300 8300

Leave your comment with mail ID and we will answer them

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PrajnaCapital [at] Gmail [dot] Com

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Invest Mutual Funds Online

Invest Any Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Download Mutual Any Fund Application Forms

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Best Performing Mutual Funds

1. Largecap Funds Invest Online
1. DSP BlackRock Top 100 Fund
2. ICICI Prudential Focused Blue Chip Fund
3. Franklin India Bluechip
4. ICICI Prudential Top 100 Fund

B. Large and Midcap Funds Invest Online

1. ICICI Prudential Dynamic Plan
2. HDFC Top 200 Fund
3. UTI Dividend Yield Fund
4. Birla Sun Life Front Line Equity Fund
5. Franklin India Prima

C. Mid and SmallCap Funds Invest Online

1. Reliance Equity Opportunities Fund
2. DSP BlackRock Small & Midcap Fund
3. Sundaram Select Midcap
4. IDFC Premier Equity Fund
5. Birla Sun Life Dividend Yield Plus
6. SBI Emerging Businesses Fund
7. HDFC Mid-Cap Opportunities Fund
8. ICICI Prudential Discovery Fund

D. Small and MicroCap Funds Invest Online

1. DSP BlackRock MicroCap Fund
2. Franklin India Smaller Companies

E. Sector Funds Invest Online

1. Reliance Banking Fund
2. Reliance Banking Fund
3. ICICI Prudential Banking and Financial Services Fund

F. Tax Saver Mutual Funds Invest Online

1. ICICI Prudential Tax Plan

2. HDFC Taxsaver

3. DSP BlackRock Tax Saver Fund
4. Reliance Tax Saver (ELSS) Fund

G. Gold Mutual Funds Invest Online

1. Relaince Gold Savings Fund
2. ICICI Prudential Regular Gold Savings Fund
3. HDFC Gold Fund
4. Birla Sun Life Gold

H. International funds Invest Online

1. Birla Sun Life International Equity Plan A

2. DSP BlackRock US Flexible Equity

3. FT India Feeder Franklin US Opportunities

4. ICICI Prudential US Bluechip Equity

5. Motilal Oswal MOSt Shares NASDAQ-100 ETF

Download Tax Saving Mutual Fund Application Forms

Invest In Tax Saving Mutual Funds Online

Buy Gold Mutual Funds

Leave a missed Call on

94 8300 8300

 

ECS for NPS Investing

The National Pension System provides the ECS mandate facility to its subscribers to let them invest electronically. Find out more

 

NPS provides an ECS mandate facility to its subscribers to let them invest electronically by giving an auto debit mandate to their banks. Download the ECS Mandate form from the Point of Presence (PoP) website or collect the mandate form from the PoP with which you wish to register for making ECS payment. Units will be allotted at NAV based purchase price declared on the fourth day of ECS debit made on the subscriber's bank account. In case the date falls on a non-business day, the immediate next business day will be taken into account for the purpose of determining the NAV.

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

Leave a missed Call on 94 8300 8300

Leave your comment with mail ID and we will answer them

OR

You can write back to us at

PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest Mutual Funds Online

Invest Any Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Download Mutual Any Fund Application Forms

---------------------------------------------

Best Performing Mutual Funds

1. Largecap Funds Invest Online
1. DSP BlackRock Top 100 Fund
2. ICICI Prudential Focused Blue Chip Fund
3. Franklin India Bluechip
4. ICICI Prudential Top 100 Fund

B. Large and Midcap Funds Invest Online

1. ICICI Prudential Dynamic Plan
2. HDFC Top 200 Fund
3. UTI Dividend Yield Fund
4. Birla Sun Life Front Line Equity Fund
5. Franklin India Prima

C. Mid and SmallCap Funds Invest Online

1. Reliance Equity Opportunities Fund
2. DSP BlackRock Small & Midcap Fund
3. Sundaram Select Midcap
4. IDFC Premier Equity Fund
5. Birla Sun Life Dividend Yield Plus
6. SBI Emerging Businesses Fund
7. HDFC Mid-Cap Opportunities Fund
8. ICICI Prudential Discovery Fund

D. Small and MicroCap Funds Invest Online

1. DSP BlackRock MicroCap Fund
2. Franklin India Smaller Companies

E. Sector Funds Invest Online

1. Reliance Banking Fund
2. Reliance Banking Fund
3. ICICI Prudential Banking and Financial Services Fund

F. Tax Saver Mutual Funds Invest Online

1. ICICI Prudential Tax Plan

2. HDFC Taxsaver

3. DSP BlackRock Tax Saver Fund
4. Reliance Tax Saver (ELSS) Fund

G. Gold Mutual Funds Invest Online

1. Relaince Gold Savings Fund
2. ICICI Prudential Regular Gold Savings Fund
3. HDFC Gold Fund
4. Birla Sun Life Gold

H. International funds Invest Online

1. Birla Sun Life International Equity Plan A

2. DSP BlackRock US Flexible Equity

3. FT India Feeder Franklin US Opportunities

4. ICICI Prudential US Bluechip Equity

5. Motilal Oswal MOSt Shares NASDAQ-100 ETF

Download Tax Saving Mutual Fund Application Forms

Invest In Tax Saving Mutual Funds Online

Buy Gold Mutual Funds

Leave a missed Call on

94 8300 8300

 

Gold ETFs and Budget 2014

 

The tax advantage they enjoyed over physical gold has been done away with

Last year, gold exchange traded funds (ETFs) had gained a great deal from the depreciation in the rupee and the UPA government's move to impose additional levy on gold imports, making it an attractive option for investors. The landed price of the yellow metal had surged, pushing up the net asset value (NAV) of gold ETFs.

However, the recent budget proposal by Finance Minister Arun Jaitley has thrown a spanner in the works for gold fund investors. The revised tax structure for all non-equity funds, including gold ETFs and gold savings funds, and the extension of the holding period from 12 to 36 months to be eligible for long-term capital gains, have effectively changed the product proposition of paper gold. Does this mean gold ETFs have lost their advantage over physical gold?

Eroding advantage To qualify as long-term capital gains, the minimum holding period for gold ETFs (considered as mutual fund units) was one year, and was taxed either at a flat rate of 10% or at 20% after indexation (where gains are adjusted for inflation). Physical gold, on the other hand, had to be held for at least three years to be termed as long-term capital gains, taxed at 20% with indexation. Now, the finance minister proposes to bring physical gold and gold ETFs on an even keel by raising the holding period to 36 months for both and taxing it higher at 20% with indexation benefits, from the earlier 10% for gold ETFs

The move will rob the common man of the advantage of investing in pa per gold to some extent. There are still lots of factors that make gold ETFs a more efficient alternative to buying gold in physical form.

Owning physical gold, whether certified gold coins and bars, or jewellery, is a hassle. Jewellery, for instance, should never be an investor's pick simply because you have to pay a hefty sum over and above the metal's price as part of wastage and making charges. You will also lose out when you sell it--the jeweller usually deducts 5-10% from the prevalent rate of the yellow metal. While you can buy certified gold bars or coins from banks, you cannot sell them back. Besides, the actual purity of gold can be suspect. The other concern is the safekeeping of physical gold where you might have to hire a locker to store it, adding to your costs. In comparison, paper gold not only offers the convenience of holding it in the electronic form, but the questions on the purity of the metal do not crop up. Besides, you can buy gold ETFs equivalent to even half a gram of physical gold, allowing you to invest smaller amounts in the precious metal. The ability to buy gold ETFs in smaller denominations provides respite to those who cannot shell out a lump sum.

Moreover, physical gold also contributes to your wealth tax outgo.
What you should do Gold fund investors may have to rethink their investment strategy.

The game has changed for all those who are looking to hold gold investments for less than three years." If you are invested in gold ETFs, it would be prudent for you to wait till your investment completes three years. "Not much has changed for long-term investors, but those looking to make quick gains from gold investments are stuck. Experts say one must take a decision based on the expected gold price movement. If you expect gold prices to fall in the short term, book profits now and invest the proceeds in better alternatives. If you expect gold prices to head north, then stay put.

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

Leave a missed Call on 94 8300 8300

Leave your comment with mail ID and we will answer them

OR

You can write back to us at

PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest Mutual Funds Online

Invest Any Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Download Mutual Any Fund Application Forms

---------------------------------------------

Best Performing Mutual Funds

1. Largecap Funds Invest Online
1. DSP BlackRock Top 100 Fund
2. ICICI Prudential Focused Blue Chip Fund
3. Franklin India Bluechip
4. ICICI Prudential Top 100 Fund

B. Large and Midcap Funds Invest Online

1. ICICI Prudential Dynamic Plan
2. HDFC Top 200 Fund
3. UTI Dividend Yield Fund
4. Birla Sun Life Front Line Equity Fund
5. Franklin India Prima

C. Mid and SmallCap Funds Invest Online

1. Reliance Equity Opportunities Fund
2. DSP BlackRock Small & Midcap Fund
3. Sundaram Select Midcap
4. IDFC Premier Equity Fund
5. Birla Sun Life Dividend Yield Plus
6. SBI Emerging Businesses Fund
7. HDFC Mid-Cap Opportunities Fund
8. ICICI Prudential Discovery Fund

D. Small and MicroCap Funds Invest Online

1. DSP BlackRock MicroCap Fund
2. Franklin India Smaller Companies

E. Sector Funds Invest Online

1. Reliance Banking Fund
2. Reliance Banking Fund
3. ICICI Prudential Banking and Financial Services Fund

F. Tax Saver Mutual Funds Invest Online

1. ICICI Prudential Tax Plan

2. HDFC Taxsaver

3. DSP BlackRock Tax Saver Fund
4. Reliance Tax Saver (ELSS) Fund

G. Gold Mutual Funds Invest Online

1. Relaince Gold Savings Fund
2. ICICI Prudential Regular Gold Savings Fund
3. HDFC Gold Fund
4. Birla Sun Life Gold

H. International funds Invest Online

1. Birla Sun Life International Equity Plan A

2. DSP BlackRock US Flexible Equity

3. FT India Feeder Franklin US Opportunities

4. ICICI Prudential US Bluechip Equity

5. Motilal Oswal MOSt Shares NASDAQ-100 ETF