Benefits of Tax Saver Mutual Funds

There are lots of benefits to be gain from investing in a tax saving mutual fund. These are some of them:

• The first and most obvious benefit is that the investments are eligible for tax benefits up to Rs. 1.5 lakh.
• The second benefit is that long term capital gains are not taxed.
• Investments in these funds can be made as a means to plan for future expenses like buying a car or paying the down payment for a house.
• These plans allow investors to invest on a monthly basis via an SIP (Systematic Investment Plan) thereby negating the need to invest in one go.
• The funds are not invested in one place; the portfolios are kept diverse so as to minimise the risk of massive losses.
• If you choose not to withdraw the investment, it will continue to grow and turn into savings for a rainy day.
• While you may not be able to withdraw the principal, you can withdraw the dividends earned, even during the lock-in period.
• While other investments offer lock-in periods of 6 to 15 years, these mutual funds tend to offers only 3 years of a lock in period.
• Since these schemes are open ended, investments in them can be made all year round.
• The particular fund that an investor invests in is run by a qualified funds manager thereby negating the need for investors to have knowledge of the markets.