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 have bought HDFC tax saver ELSS fund online on 31st March at 1.30 PM. As per HDFC MF, VAN of 1st April will be applied for my investment.
So will that be eligible for tax calculation till 31st March 2010, or will be moved to next year plan???
FYII.. transaction is on 31st March, NAV will be applied of 1st April.
Please reply back..
@Pranab
If an application is made after the cut-off timing, NAV will be considered for the next day.
Where the application is received upto 3.00 p.m for equity mutual fund, the closing NAV of the day of receipt of application shall be applicable.
For online transactions, 1pm is the cut off time. Your financial advisor should have told you about this.
Hi Pankaj,
I read somewhere that one can switch from a normal mutual fund to an ELSS fund within the same fund house without paying any additional load, when it is time for tax planning.
What do you think of this? Are there any obvious reasons against doing it? (I’ve just begun investing in ELSS, etc)
@Cheryl
Yes, you can switch among funds of a same AMC. Its same like selling one and buying another. Same process will be followed. Entry load is now zero for all mutual fund purchase. But If there is any exit load on switch-out fund, its levied and also STT may be charged depending on mutual fund type(Equity/Debt/Liquid).
Suppose at the date of switch request, your XYZ fund are at value P, and you want to which to fund ABC.
Then total amount invested in Y= P – (P%exit load, if any) – STT (if applicable)
This is a good idea and you can even do it like SIP and its called Systematic Transfer Plan (STP).
Thanks a lot Pankaj
Hi,
I have invested in the HDFC TAXSAVER via SIP but i did it only for 1 yr can i change it to 3 yrs to get the tax benifit .How much would i have to pay to get it changed???
@Rohan
You can start a new SIP again for 24 months.
hi pankaj how do they calculate annual return for mutual fund.
@Sony
Annual return for a growth mutual fund is % difference between NAV at start of year and end of year.
Which is the best tax saving mutual fund to invest? I want to open a SIP soon.
@Pranab
You can invest in Canara Robeco Equity Tax Saver, Sundaram BNP Paribas Taxsaver, HDFC Taxsaver and Franklin India Taxshield – Growth
Pankaj, I have choosen to invest in HDFC tax saver (G). I will start an SIP soon.
So, please advice me, what is the best frequency for investment? SI should be Monthly or Quarterly???
@Pranab
It will be good to have it monthly.
Hi Pankaj,
For this year we can invest 20000/ – on diversified funds, what are the best diversified funds. Pleae let me know.
@KumthekarSR
You can invest in HDFC Top 200 Fund, Birla Sunlife Frontline equity fund, DSP Backrock Top 100 fund, Sundaram S.M.I.L.E Fund, HDFC Equity Fund or ICICI Pru Discovery Fund.
Hi,
I invested in Sundaram mf tax saver dividend option. can i change to growth option now?..
@Swetha
You cannot switch tax saving mutual fund before 3 years.
Hi Pankaj
can u tell me what exactly is monthly income plan (MIP) and how good it is?
Also let me know which funds are good for MIP.
@Biren
MIP mutual funds are debt based schemes which invest mostly into debt instruments like Govt Bonds, Company FDs etc. They generally provides regular income in form of dividends. On risk side, they are pretty much safe and can give you average 9-12% return.
Some good MIP schemes are : Birla Sun Life MIP II Savings 5, Reliance MIP, HSBC MIP Savings, Canara Robeco MIP and HDFC MIP Long-term.
Thanks Pankaj
So if i have to invest in MIP ,its one time investment or can i invest a fixed amount monthly also?
@Biren,
You can invest lump-sum or through SIP (monthly)
Hi pankaj..
What is the difference between growth plan and Dividend reinvestment plan??
Plz tell me which one is better irrespective of risk…..
@SudhirBhardwaj
Dividend reinvestment plan is a good plan for income tax saving funds. Whatever dividend is reinvested in a year, it can be considered as fresh investment and can be counted under 80C savings. Lets say, you invested 50K in a tax saving mutual fund in year and a dividend is announced of around 5K, which is invested automatically again into fund. Then total savings you can declare is 55K.
Growth option is better if you want to be invested for a longer period.
If you are investing not for just income tax savings purpose, but for long term growth, then growth plan is better.
Howz Canara Robeco Equity Tax Saver compared to other tax saver funds?
@SalilJain
Canara Tax saver is one of the best performed fund.
Hi,
i want to invest in mutual funds for tax saving,so please suggest me which mutual fund is beeter to invest.
regds
sandde[
@Sandeep
You can invest in 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 or Fidelity Tax Advantage.
Read more: http://www.pankajbatra.com/finance/best-tax-saving-mutual-funds/#ixzz0oxNbUBlP
Dear Pankaj
Kindly suggest me the best Index fund
@Sudhir
Some of the good Index funds are Banking BeES, Nifty Junior BeES, HDFC Index- Sensex Plus Plan, Kotak PSU bank ETF, PSU Bank BeES and ICICI Prudential Index Retail.
thanks Pankaj..
But I wanted to ask abt nifty index fund of different fund house..
@Sudhir
Some of the good Nifty funds are Nifty Junior BeES, Franklin India Index NSE Nifty, Nifty Benchmark ETS, UTI Nifty Index and Canara Robeco Nifty Index
Hi pankaj,
My portfolio contains
70k in PPF
12k in LIC
i want to enter mutual fund market and start with HDFC ELSS schemes, i plan to invest around 40k per anum….could you please tell me if this is the right decision
@Shashank
HDFC Tax saver is a good fund to invest. You can split your amount among Canara Robeco Equity Tax Saver, HDFC Taxsaver, Fidelity Tax Advantage and Franklin India Taxshield.
Also in case you don’t have term insurance, get that first (at least for coverage of 100 times your monthly salary).
Dear Pankaj,
I was told by my broker that the income from Monthly Income Plans of UTI (LTA), Reliance and HDFC are all income tax free because of the equity component in these schemes. Please let me know if this is correct. Also, if the units are sold after one year, will they attract the Securities Transaction Tax ? If so, is this to be paid by me ?
@Utpal
Dividends earned from MIPs are tax free.
As MIP are not fully equity based funds, For short term capital gains (MIPs sold before one year), the gain will be added to taxable income and income tax will be applicable as per your personal income tax slab. If you sell units after a year, a long-term capital gains tax is applicable – 10 % tax will be levied (without indexation benefit) or 20 %tax with indexation benefit, whichever is lower.
STT is levied only on equity oriented mutual funds.
Hello Pankaj,
Thanks for your clear reply. I appreciate this very much and thank you for it. I will come back to you from time to time with other queries.
Hi Pankaj,
I invested in money plus(180) in 2007 Rs 60,000, 2008 and 2009 also. Looks like performance is not good.
Can i keep those or as three years are completed can I close?
Thanks,
Rambabu
@Rambabu
Money Plus is not a very good product.
Instead of this, you must have got term insurance and equity based mutual funds.
If its not in loss and its terms/conditions allow you to sell after 3 years, you may decide to sell these and better invest in some better product.
Hi Pankaj…for a 3-4 year investment..for tax saving as well as a decent return(if thts possible)
would the growth or the dvidend (if dividend, payout or reinvestment) be better.
Thanks,
Phoenix
@Phoenix
Growth option is better if you want to be invested for a longer period, dividend when you need your money back at regular intervals.
Reinvestment is good for tax saving as it reinvests dividends back into mutual fund so whatever money is reinvested can also be considered for tax saving purpose.
and one more things..what exactly is term insurance?? how does it work??
Thanks,
phoenix
srry..looked arnd..no need to ansr this
Hi,
I want to know how term insurance work? And is it really needed.
@Sreelatha
Term insurance is a pure insurance product. Its least expensive insurance product.
A 25 years old person can get cover of 50 Lakhs for just 8-10000 per year premium for 35 years terms.
Ideally everybody should be insured by at-least 8-10 times his/her yearly salary.
In case of death of insured person before term completion, nominee will get whole insurance cover amount. There is no return in case insured person cross the insurance term.
Mostly the liabilities of a working person (like family expenses, house loan, car loan, children education, their marriage etc.) are till his retirement age (60-65 years). So term insurance covers risk of a person from all these. If only working person of a family passes away before his/her age, this amount can take care of all family future requirements.
Thnx for the reply Pankaj…but the HDFC I called said that reinvestment was not a good option..because once I opt for it after the frst year..there will b a lock in period for another 3 years starting from the day of reinvestment..so I wont be able to redeem the scheme immidiately after the first 3 years…if that is the case..how is reinvestment a better option?? could you please throw some light on this?thnx..
Regards,
Phoenix
@Phoenix
3 years Lock in on tax saving mutual funds starts from date of purchase of funds.
So in case of reinvestment mode, let say you purchased P units on Feb’08 and a dividend was declared in May’10, which was used to buy (reinvestment) Q more units. Now you can redeem P units after Feb’11 and Q units after May’13.
Also one more advantage here is, you can show investment for Q units as tax saving investment in year 2010-11 and P units in 2007-2008.