Are you interested in making money while also saving on taxes? It seems like a joke, but it is not. There is a way to invest money and bear its returns while saving on taxes.
This type of investment is called ELSS, a type of mutual fund investment. Keep reading to learn all you need to know about it and also for some of the best performing mutual funds.
What is ELSS?
ELSS, also called tax-saver mutual funds, is a category of mutual funds primarily investing in equity and equity-related instruments.
As ELSS is a category of mutual funds, it is subjected to similar risks, and investors should be aware when investing in any kind of mutual fund. Although there are different funds with various risk levels, you might wonder why you would choose an ELSS, which comes with risk.
Although other forms of investing can also save taxes, ELSS offers greater returns with a lock-in period of just three years. This is the shortest lock-in period with the potential for higher returns than other tax-saving options, such as PPF or NSC.
What are the best mutual fund to invest today?
As stated above, there are a lot of factors that are required to be considered when investing in a mutual fund. While there are best-performing funds, there are also certain factors that one can use to assess the right mutual fund for themselves.
How do you determine the right mutual fund?
- Fund Performance
The historical performance of a fund is critical to assess before investing. Equity investment usually comes with higher returns but equally high risks. If a fund consistently performs well and the future market seems stable, it is good to invest in.
- Risk Profile
Different investors have different risk appetites, and these risks need to be measured and considered when investing to judge the return on investment and whether you should invest in a particular fund.
- Expertise of the fund manager
A fund manager’s expertise is essential when choosing a fund. Their expertise and track record can bring about a huge difference.
When choosing the right fund, one can use these three metrics to decide which fund to invest in. On the other hand, several funds are currently performing the best and can be considered when looking into investing in them.
Top-performing mutual funds
- Quant Tax Plan (G) – with a 3-year return of 36.7%.
- Bandhan Tax Advantage ELSS Fund (G) – with a 3-year return of 31.7%.
- SBI Long Term Equity Fund (G) – with a 3-year return of 28%
- Nippon India Tax Saver ELSS Fund (G) – with a 3-year return of 27.9%
- HDFC TaxSaver fund (G) – with a 3-year return of 27.8%
These are some of the best-performing funds to invest in 2023, but keep in mind that they may change, and you must check these out when investing.
Note: Those wondering where they can find these can download the Bajaj Finserv app and search for them in the Mutual Fund section of the Investment Bazaar.
Now that you know about ELSS, some of the best mutual funds for ELSS, and the factors to consider when choosing the right fund to invest in, you can start investing while saving on taxes.