Tax Saving Mutual Fund Scheme
Investing in a Tax Saving Mutual Fund Scheme
Investing in a tax saving mutual fund scheme is one of the best long-term wealth-creating investment tools in the country. A tax saving mutual fund scheme qualifies for the Section 80c deduction. But, the deadline for submission of Investment Proofs is fast approaching. In fact, most employers collect investment documents between January and March. Consequently, a lot of people rush to buy low-yielding tax-saving products and life insurance policies.
Investing in tax saving mutual fund scheme
If you are looking for a safe and tax-efficient way to invest your money, you should consider investing in a tax-saving mutual fund scheme. These types of funds are designed to reduce the tax burden of an investor by investing in equity. You can also invest in ELSSs to save taxes under Section 80C of the IT Act. You can invest up to Rs 1.5 lakh in an ELSS and claim a tax deduction on your investments every year.
A tax saving mutual fund scheme offers two options: a growth or dividend scheme. Dividend schemes are invested to generate extra income for the fund house. Dividends are tax-free, and can be withdrawn or reinvested at any time during the investment term. Dividends are also tax-deductible, so ELSSs are an excellent choice for long-term capital appreciation. The best part is that you don’t need to be an expert to invest in equity mutual funds.
Investing in tax saving mutual fund scheme through SIP
If you are looking for tax saving mutual fund schemes, ELSS are the best choice. These funds have many benefits, including tax savings and regular returns. Investing in ELSS through a SIP has many advantages, including low minimum investment and average costs. In addition, this type of investment allows you to benefit from all market cycles. If you’re unsure about the best ELSS for you, here are some tips to help you choose the best scheme for your needs.
First, invest a modest amount of money at the start of the financial year. Alternatively, invest a larger sum at the end of the year, or invest via the SIP route. This lowers your overall risk by spreading your investments over a longer period of time. SIPs also help you achieve your long-term financial goals faster. Investing in a SIP allows you to invest a lower initial amount and gradually increase your investment amount over time.
Redeeming unlocked units of tax saving mutual fund scheme
You can redeem unlocked units of tax saving mutual fund schemes if you want to. This type of investment has a three-year lock-in period. Once you’ve invested for three years, you can redeem the units, but only at the current NAV price. You must submit a claim form to the fund manager to withdraw the investment. You can invest in tax-saving mutual funds through a Systematic Investment Plan (SIP) or a lump-sum amount.
You can redeem your mutual fund units if you haven’t used them in five years. However, it’s important to note that when you redeem unlocked units, you’ll incur an exit load. This exit load is not a statutory charge, but will be deducted from your NAV. This is one reason why you’ll need to plan ahead if you’re redeeming your investment.
