I compared ELSS (Equity Linked Saving Scheme) mutual funds on the basis of their AUM (assets under management) size and past performance in 6 months, 1 year, 2 years and 3 years.
Finally following funds were found to be good.
Canara Robeco Equity Tax Saver, Sundaram BNP Paribas Taxsaver, HDFC Taxsaver, SBI Magnum Tax Gain Scheme 93 – Dividend, Franklin India Taxshield – Growth, DSPBR Tax Saver, Fidelity Tax Advantage
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Hi Pankaj,
I want to invest 40K for tax-savings this year & I am contemplating investing in tax-savings MFs. I read from your article that its better to invest through SIP.
Unfortunately, I have to invest before 5th Jan'11 since need to submit Investment Proof by 10th Jan'11.
I am planning to invest 10K each in Fidelity Tax Advantage, HDFC Long-Term Advantage, DSP Blackrock taxsaver and Canara Robeco Equity TaxSaver
Would request your views on the choice above - Also any other advise from you would be highly appreciated.
Thanks in advance
Gaurav
@Gaurav
All funds selected by you, have excellent past record. You may go ahead and invest in same.
Hi Pankaj,
Though from your previous posts I got many ideas about tax saving investments, I want to ask you few things.
First, Is PPF a good option for investment? I personally feel locking up money for 15 years is a pain. Please convince me as I opened a PPF account last year and right now confused to put money in it again or not.
Second, I need to do investment for tax benefit of amount 50k, could you please suggest me any good option as I need to produce the investment proofs before 15th Jan.
Since I have less time, it is equivalent to divide and invest 50k in 3-4 different MFs for diversification rather than opening up a SIP now?
@Ashish
You must divide your investments into both safer and riskier avenues. Also, rather than just thinking for short term, one must also think for the long term.
Portfolio should be a mix of safer investment (into Fixed deposits, PPF, Post office deposits, NPS) and riskier one (Equity linked mutual funds).
Advantage you get with PPF is tax free and good return. Everyone has tendency to spend whatever he has and not care about investments for future needs (children education, pension etc.). PPF fits in here for future needs. I know its a pain to see your money locked for 15 years, but Govt promotes these just to ensure public save for the long term.
If you need to put 50K now, I would advise you to do following:
1. Term insurance (if not already taken, for minimum sum insured for 10 times your annual salary), Assuming 10,000 Rs premium.
2. PPF or NPS - 10,000 Rs (if you already not have new pension scheme account, its late already to invest before 15th Jan, as it takes some time to open)
3. Equity Linked Tax saving mutual funds - Canara Robeco Equity Tax Saver, HDFC Taxsaver, Franklin India Taxshield, DSPBR Tax Saver, Fidelity Tax Advantage (6000 each in these 5 funds)
Also, apart from these savings under 80C, you may also save further by buying medical insurance for you and your family and investing in long term infrastructure bonds.
Hi,
I have invested Rupees 2000 each from August-2010 in following ELSS funds. I am planning to invest further 30000 on ELSS. I am planning to invest in the same. Can i go ahead or suggest me any other ELSS schemes.
SUNDARAM BNP Paribas
AXIS Tax saver
ICICI prudentail
@Radhakrishna
I would advise you to choose among Canara Robeco Equity Tax Saver, HDFC Taxsaver, Franklin India Taxshield, DSPBR Tax Saver and Fidelity Tax Advantage
Hi Pankaj,
I really like your posts and input on savings. I have a question, What are the benefits and disadvantage of investing in NPS (New Pension Scheme) versus that of PPF( Public Provident Fund) ? Which is a better option in the long term ?
I know that PPF has a lock in period of 15yrs ... how much for NPS?
@AmeetB
PPF scheme is only for 15 years (can be extended further for block of 5 years). NPS is locked till age 58 years.
PPF gives only fixed return (9.5% at present), whereas in NPS, you can choose allocation of investment to debt and equity schemes.
Over a long period of time, NPS will give better return than PPF. Plus as money is locked till retirement age, its beneficial at old age.
NPS is a new initiative and better managed than old PPF.
I also want to ask... where can I purchase a NPS from ? Where can I open a PPF account ?
@AmeeB
To know more about NPS, read this post: http://www.pankajbatra.com/india/new-pension-scheme-nps-india/
You can open a PPF account at any branch of the State Bank (SBI, Mysore, Hyderabad etc), or with some other nationalized banks. A PPF account can also be opened at any post office.
Hi Pankaj,
Is is better to purchase MFs with high NAV or low NAV value at this time.
How is sundram tax saver?
@Ashish
High or Low NAV of mutual funds does not necessarily depicts if the fund is good or bad.
Rather than going by NAV, check out how much return fund has generated in past (6 months, 1 year, 2 years, 3 years, 5 years etc). If a fund is there in top list for all these durations, there is high chance that it will also do good in future.
Sundaram Tax saver is good fund, but you also choose from some of the better ones like Canara Robeco Equity Tax Saver, HDFC Taxsaver, Franklin India Taxshield, DSPBR Tax Saver and Fidelity Tax Advantage.
Hii,
I have invested in SBI Magnum and IDFC for the prupose of tax saving.So wats ur opinion on both of these funds.....and How can i decide which fund is better apart from the NAV which is itself largely inflated by the funds....
@Rohit
Rather than going by NAV, check out how much return fund has generated in past (6 months, 1 year, 2 years, 3 years, 5 years etc). If a fund is there in top list for all these durations, there is high chance that it will also do good in future.
You can choose from some of the better funds like Canara Robeco Equity Tax Saver, HDFC Taxsaver, Franklin India Taxshield, DSPBR Tax Saver and Fidelity Tax Advantage.
Hi,
I need to Invest 80k in ELSS schemes for tax saving purposes. I understand that the time is not right for a lumpsum investment, but need to declare my investments for the year in the company I work for. Can I still go for an SIP? How should I split my investments into the various ELSS schemes (how many goes where?). Thanks!!!
@Schadha
Minimum investment period for SIP is 6 months in tax saving mutual funds.
If you start SIP now, you can only invest 3 times (Jan-Mar) this financial year. You can start SIP for 6 months, which will also cover 3 months of next financial year.
Invest 4000 each in Canara Robeco Equity Tax Saver, HDFC Taxsaver, Franklin India Taxshield, DSPBR Tax Saver and Fidelity Tax Advantage monthly.
For remaining 20000, invest in PPF/Fixed deposit and buy Term insurance (in not already taken)
thank you!
Hi Pankaj,
I need to invest in some of the ELSS mentioned by you. Could you to pls suggest me how to go about it? I know the form can be downloaded but where should I deposit it? How long will the entire procedure take as I need to submit the proofs of investment by 10th Jan'11 in my office?
Also, can I deposit the lump sum amount for this FY and start SIP for the next FY?
@Shefali
Mutual fund investment takes one day only and you will get statement of investment on same day on your email id, which can be submitted as investment proof to your employer.
Regarding how and where to apply in mutual funds, I would advise you to read following posts.
http://www.pankajbatra.com/india/how-to-transact-mutual-funds-online-directly/
http://www.pankajbatra.com/finance/mutual-fund-investment-with-zero-entry-load/
http://www.pankajbatra.com/finance/best-way-to-apply-in-sip/
Yes, you can invest in lump sum now and start SIP next year.
I dont have any term insurance nor LIC for me. Should I take term insurance/LIC now or shall I take it after my marriage? I have insurance from my company.
Can you suggest me a good (for Tax saving):
1) LIC Policy where I can get assured long term money, even though returns are less.
2) A good term insurance from any company.
Please suggest how much money I should invest?
@Vicky
Its better to buy term insurance as early as possible as premium increases with age. Less the age, less the premium (which remains same for next policy term of say 30-35 years).
You can choose LIC Amulya Jeevan as term insurance and invest into PPF or NPS for long term safe investment.
Also consider equity linked mutual funds for long term as they will yield better return in long run than PPF or NPS.
PANKAJ,
MY QUESTION WAS THAT IF I TAKE TERM INSURANCE FOR ME NOW, CAN I ADD MY FAMILY MEMBERS ONCE I GET MARRIED INTO THE SAME POLICY WITH SAME PREMIUM. OR DO I WOULD NEED TO TAKE ANOTHER POLICY FOR MY FAMILY. IS THERE ANY FAMILY FLOATER POLICY WHICH PROVIDES THIS OPTION.
I HAVE LOOKED AT LIC AMULYA JEEVAN, I WAS ALSO THINKING IF THERE ARE ANY OTHER GOOD POLICY FROM ICICI/ APPOLO/HDFC AND SBI ???
@Vicky
Term insurance is an individual insurance and family members can not be added to it.
I believe, you are confused between Medical and Life term insurance.
If you buy an individual medical insurance policy of you, more family members cannot be added.
In case of family floater medical policies, only children can be added later, not the wife.
Apollo does not provide life insurance.
ICICI iProtect is another good policy, apart from LIC Amulya Jeevan. HDFC and SBI too provide term insurances but their premiums and ratings are not that good.
Pankaj,
Can you help me in guiding how to buy ICICI I Protect Term Policy. I want to buy it within a week only. Please let me know if there are any better newer term policy in market than ICICI I protect. One query I have, once I do the payment online, how do I sumbit my documents?
Best Regards,
Vicky
I am looking for a Coverage of Rs.50 Lakhs to Rs.1 Crore..
@Vicky
ICICI iProtect term policy has been replaced by ICICI Pru iCare. You can buy it online on this link: http://www.iciciprulife.com/public/BuyOnline/iCare/iCare.htm
After you make payment online, you can send scanned copies of document on email or can also deposit hard copies at nearest ICICI Pru insurance branch.
LIC is also expected to launch its online term insurance policy soon.