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
Facebook Comments
Hi Pankaj,
I am going to take PPF and NPS. Can I save tax after taking both things?
Mayank
@Mayank
Yes, exemption can be availed for both under Section 80C (subject to max limit of 1 lac)
I want 2 invest in ELSS for 1 year. which one will be d best one with an assured gain? and whether such an investment is at all a good decision for this volatile market??
@Smita
ELSS have lock-in period of three years and you cannot invest for just one year.
These are equity linked and depends on share market conditions. There is no assured return. You might get a high return or you may also incur loss as well.
Investment in equities is for long term and it generates better return in longer run.
If you invest through SIP (monthly), you can invest anytime as cost of buying will average out.
Hi Pankaj,
I wanted to know how the lock-in period of SIP based ELSS Mutual Fund plan works?
@Rahul
Lock-in on equity linked tax saver mutual funds is of 3 years from date of buying units.
In case of SIP, lets say, x units were bought for P rupees in April 2010, y units were bought for P rupees in May 2010 etc. Then x units will be locked till 31st Mar 2013, y units till 30th April, 2013.
Pankaj ji
which is the best ELSS fund to invest in?
– chintu
@Chintu
You may choose among: Canara Robeco Equity Tax Saver, HDFC Taxsaver, Franklin India Taxshield, DSPBR Tax Saver and Fidelity Tax Advantage.
Hi Pankaj,
I am planning to buy a Term Insurance plan. Can you please suggest me a best plan?
Also if I take cover for 30 years, do I have to pay premiums for 30 years?
Thanks,
Rahul
@Rahul
You may choose among LIC Amulya Jeevan, ICICI Pru iProtect, Kotak e-Preferred Term plan and Metlife Protect.
Term insurance can be bought either with single premium (you will have to pay only once) or with regular premium till policy period (yearly/monthly/quarterly). So either you have to pay once or for 30 years.
Hi Pankaj,
Hats off to you for all the information you provide and a special thanks for replying to all the queries. I would request you to please give me your valuable suggestion in planning the investments.
For last year (2010), I had invested in Reliance Tax Saver-Dividend Plan for Rs.26000 (SIP) and HDFC Tax Saver-Dividend Fund for Rs.17000 (SIP). Then, I invested lumpsums in HDFC Long Term Advantage Fund (Rs.5000), Franklin Mutual Fund (Rs.5000) and Fidelity Mutual Fund (Rs.5000). Apart from Mutual Fund investments, I’ve also taken a term insurance with SBI for a premium of Rs.10000. I still need to invest another Rs.32000. Could you please suggest some good options? I don’t want to invest in mutual funds anymore and at the same time, am not interested in infrastructure bonds or postal schemes with a longer lock-in period.
Also, how should I plan my investments for this current year(2011)? I reckon no tax exemptions are given for Mutual Funds from this FY. Please give your valuable suggestions.
Thank You in advance.
Regards,
Gowri Shankar
@Gowri
Thanks for all these good words.
Apart from Tax saving mutual funds, infra bonds and NSC, For 80-C saving You may choose from 5-year tax-saver bank Fixed deposits, PPF or New Pension Scheme (NPS).
In case you are employed and there is EPF deduction from salary, then Employees contribution towards EPF is also included in this 1 lac 80-C limit.
You may also consider buying another term insurance, in case sum assured as of now is less than 10 times your annual salary.
Other than 80-C, there is more to tax saving which can be done. Read more at http://www.socialfinance.in/questions/7/tax-saving
There won’t be exemption on tax saving mutual fund and most the other investments from financial year 2012-13, when DTC comes into play. Term insurance, NPS and PPF will continue to provide benefits.
On a side note, I really liked you blog. I am also a software engineer by profession and an amateur photographer 🙂
Thanks a lot Pankaj ! It’s great to know that both of us have similar profession and interests 🙂 I’ll probably look into the infrabonds and NSCs to cover my tax exemptions. Thank u once again!! Keep up the good work….
Hi Pankaj,
What is your opinion on Reliance Gold Savings Fund NFO? I know there is no tax benefits, but still is it a good fund to invest? I also heard that there are no lock-in periods like Mutual Funds. In that case, when can I redeem it?
@Gowri
Reliance Gold savings fund is a open ended mutual fund (you may purchase and redeem anytime) that will invest into Gold. You can start a SIP as well.
There is no entry load on investment, but there is an exit load of 2% if redemption/switch is done before one year.
Till now, Gold could be bought through ETF (exchange traded funds) or e-gold, both of which needs demat account to transact. Also there was no option for a SIP in these methods.
If you want to diversify your portfolio by adding gold investment, this fund will be good option.
But as its a new fund, there is no history of performance and as of yet it cannot be compared with returns from Gold ETFs. Only time will tell its performance.
If you already have a demat account, I would advise you to invest in Gold ETFs, as they directly move with gold prices and there are not much management charges.
Thanks a ton Pankaj! Am now interested in opening a demat account and start investing on Gold ETFs. Is e-Gold and Gold ETFs same? I would also like to ask you who is the best demat account provider in India. I have SB Accounts with SBI and HDFC, but i have done all my mutual fund investments through Bajaj Capital. It’s convenient for me to open an account with them as they are easily approachable to me.
Is Bajaj Capital good? Please advice.
@Gowri
Please read mode about Gold ETF and e-Gold here: http://answers.pankajbatra.com/finance/stock-market/what-is-the-difference-between-gold-etf-and-e-gold/
Bajaj capital does not have demat account facility. They are just like an mutual fund agent.
You may open demat account with IndiaBulls, ShareKhan, Kotak Securities, ICICI, Religare, Reliance etc.
Hi Pankaj,
Bajaj Capital offers demat account services @Rs.1500 lifetime charges. If not Bajaj Capital, please tell me a good provider for demat acc. I wish to do trading in future as well
@Gowri
You may choose among IndiaBulls, ShareKhan, Kotak Securities, ICICI, Religare, Reliance etc.
All have similar services. Compare their brokerage and annual fees and choose whichever is economical.
i hv invsted 5000 in sbi magnum tax gain scheme
i was unware that it has 3 years lock in
do i have to give more money into the fund or its ok to avoid this for 1 year?
@MJ Singh
Mutual funds is not a recurring investment (unless SIP has been started)
If you have invested 5000 now, there is no need to put more money into same fund again.
Lock-in means that you cannot redeem these units back until three years have finished.
i want to invest Rs 10000 per month in mutual fund for long time can u suggest me any good equity funds. I also have reliance regular saving SIP (1000 Rs), HDFC Top 200 (2000Rs SIP), Sundaram Smile SIP 1000 Rs and other one time purchased mutual funds.
@Rajesh
Funds selected by you are good too.
Apart from these, you may also consider Birla Sunlife Frontline equity fund, DSP Backrock Top 100 fund, ICICI Pru Discovery Fund, Sundaram Select Midcap and HDFC Equity Fund.
Hi Pankaj. From April 2012 DTC wil come into effect and ELSS wil no longer come under tax exemption. Can i invest in ELSS via SIP from feb 2011 untill march 2012. If yes then how wil tax exemtion wil be calculated, say iam investing 2000 per month.
@Pravin
Yes, you can invest in tax saving mutual fund via SIP until march 2010.
If you put 2000 per month starting from Feb 2011, 4000 (feb-march 2011) will be counted in FY 2010-11 income tax exemption under 80-C.
And 24000 will be counted towards income tax saving for FY 2011-12.
Hi Pankaj,
I need to invest 50k for tax savings. I need to show the proofs by monday in our company. I think this is the right time to invest in mutual funds. Please suggest me the good mutual funds to scatter 50k amount based on current market situations.
Thanks,
Sreelatha
@Sreelatha
You can choose to invest among:
Canara Robeco Equity Tax Saver, HDFC Taxsaver, Franklin India Taxshield, DSPBR Tax Saver and Fidelity Tax Advantage
Also considering buying a term insurance for sum assured at-least of 10 times your annual salary.
Dear Pankaj,
I have invested in LIC Money plus (ULIP) in 2007 yly 10000/- .Three years i have paid the premium regularly.That means upto 2009 i have paid.My Tenure is for 10 yrs.Later on if i do not pay premium,does it mean my policy is lapsed or i will not get my money back that i have invested.If i asked my LIC agent,then he will say to pay regularly,because he get the comission on that basis.
So im confused whether to continue or not.Im worried if i not payed the premium ,my money will be loss.Kindly suggest.
@Santosh
Your agents has already earned huge commission and he won’t push you further for investment.
ULIPs had maximum commissions in initial 3 years only.
You may continue your policy without paying further premium: As per LIC website, If atleast three years’ premiums have been paid under the policy, the policyholder may opt for continuation of cover even beyond the revival period without reviving the policy and paying any further premiums. This option shall be required to be exercised atleast one month before the completion of the revival period. If this option is availed, the cover under the policy shall continue by deduction of relevant charges out of policy fund. This option shall continue till the Policyholder’s Fund Value reaches one annualized premium. No further premiums shall be allowed to be paid after the revival period is over.
Is Diversified mutual funds comes under 80c, if yes, which is the best option for investment? or how can divide my investments between those two types? I am planning to invest around 40000 in mutual funds.
@Ram
There is separate category of mutual funds available for tax saving. Investment under normal equity diversified mutual funds are not available for exemption under 80-C.
You may choose among: Canara Robeco Equity Tax Saver, HDFC Taxsaver, Franklin India Taxshield, DSPBR Tax Saver and Fidelity Tax Advantage; If you want to invest in tax saver mutual funds.
I have not understood ur quote below.Can u clarify again.Whether i should continue in this fund without any further investment or pull out of this.If yes,will there will be any deduction.And also is there any major reason behind closing of tax saving schemes(ELSS) schemes from 2012 onwards.
(This option shall be required to be exercised atleast one month before the completion of the revival period. If this option is availed, the cover under the policy shall continue by deduction of relevant charges out of policy fund. This option shall continue till the Policyholder’s Fund Value reaches one annualized premium. No further premiums shall be allowed to be paid after the revival period is over.)
Read more: http://www.pankajbatra.com/finance/best-tax-saving-mutual-funds/#ixzz1EK9EIsMZ
@Santosh
Earlier statement means that, if you decide to continue policy without further investment, insurance and other management charges will continue to be debited from balance until this balance will be more than a year’s premium. But at the same time, policy will continue to have its benefits and returns on NAV.
You can continue with this policy without further investment.
You can inquire about surrender value (after all deductions etc.) from LIC customer care or agent. If are getting an acceptable return on the money investment, you can also pull out your money.
From 1st April, 2012, Direct tax code will be applicable and most of the tax exemptions under 80-C have been removed. Retirement and pure insurance plans have been focused on in new rules.
hi pankaj,
i need to invest (tax saving) Rs 100000/- each for four of my family member. i am confused where to invest i.e elss or debt instrument. if mutual fund
1. HDFC TAX SAVER………RS.8000 PM
2. ICICI PRU TAX PLAN…..RS. 8000PM
3. BIRLA 96 TAX RELIEF(G) RS.8000PM
Apart from that i want to invest in
1. HDFC TOP 200
2. BSL FRONTLINE EQ
3. BSL DIVIDEND YIELD PLUS(G)
4. RELIANCE RSF FUND(G)
Also recommend any best fund for midcap and small cap
@Mukesh
I would advise you to divide your tax saving investment into following options:
1. Term Insurance (for sum assured at-least 10 times your annual salary)
2. Medical Insurance (for you, your family and parents)
3. Employee provident fund (EPF), or Public provident fund PPF (in case you are not contributing to EPF)
4. New pension scheme
5. SIP in Tax saver mutual fund (ELSS)
6. Long term infrastructure bond (In case your income falls in maximum slab of 30% income tax rate)
Regarding 5th option, you may choose to invest among: Canara Robeco Equity Tax Saver, HDFC Taxsaver, Franklin India Taxshield, DSPBR Tax Saver and Fidelity Tax Advantage.
For diversified equity, you can invest in Birla Sunlife Frontline equity fund, HDFC Top 200 Fund, DSP Backrock Top 100 fund and Reliance Regular Savings – Equity.
For small and midcap, choose among ICICI Pru Discovery Fund, DSP Blackrock small and midcap fund, Sundaram Select Midcap, HDFC Equity Fund and Sundaram S.M.I.L.E Fund
Pankaj,,there are these various investment cos that promise 12% a month and one of them is even regd and has its shres in the market. its called imtsons. Is it wise to invest with them? or would you know of others who are trustworthy and offer good returns?
Thanks
@Siddharth
Don’t invest into such un-regularized companies. No company can guarantee such a high return.
There is no quick route to earn returns.
Dear sir, i am beginner and would like to invest Rs 1000-1500 thr SIP. Plz suggests some mutual funds.
Is Reliance gold saving fund a good option, he yes then which plan will be better Growth or dividend- payout/reinvest?
Thanks.
@Siddharth
I would advise you to start SIP in any of the equity diversified funds: Birla Sunlife Frontline equity fund, HDFC Top 200 Fund, DSP Backrock Top 100 fund and Reliance Regular Savings – Equity.
Reliance Gold savings fund is a open ended mutual fund (you may purchase and redeem anytime) that will invest into Gold.
There is no entry load on investment, but there is an exit load of 2% if redemption/switch is done before one year.
Till now, Gold could be bought through ETF (exchange traded funds) or e-gold, both of which needs demat account to transact. Also there was no option for a SIP in these methods.
If you want to diversify your portfolio by adding gold investment, this fund will be good option.
But as its a new fund, there is no history of performance and as of yet it cannot be compared with returns from Gold ETFs. Only time will tell its performance.
If you already have a demat account, I would advise you to invest in Gold ETFs, as they directly move with gold prices and there are not much management charges.
Dear sir,
thanks a lot for valuable advise. In the funds mentioned by you, which plan: growth or dividend would be better?? I have read your blog abt the difference between these plans(I think growth suits me), but I am bit confused abt tax benefit part??
And what should be the lockin period? Plz suggest! !
Thanks.
@Siddharth
Growth plans are best ones generally.
But in case of tax savers, dividend reinvestment plans are better as all reinvestments from dividends are also considered as separate investment and can be claimed for tax exemption.
Let say, you invested 10000 in tax saving mutual funds Mar 2010 (div reinvest) and shown the same investment for tax exemption for FY 2009-10.
Then in 2010-11, you further invested 10000 in tax saving mutual funds and also got 3000 as dividend from earlier investment. Now for tax exemption purposes, 13000 will be considered for FY 2010-11.
Lock-in for tax saver mutual funds is for 3 years from the date of purchase of units. Say, if you bought 10 units for 1000 Rs in Jan 2010, 11 units for 1000 Rs in Feb 2010 and 12 units in Mar 2010; Then 10 units can be redeemed after Jan 2013, total 21 after Feb 2013 and all 33 after Mar 2013.
Lock-in period for dividend reinvestment will be 3 years from date of dividend declared as new units are bought on same day.
I want to invest 5000 rs per month in PPF, mutal funds .Can you suggest me what should be the % of investment in PPF and mutal funds and which are the best mutual funds.Presenly i am investing 2000 in LIC MOney Plus ULIPand 1000 in HDFC TOP 200 per month.pls suggest me.
@Mukesh
Investment ratio in equity and debt based products should be based on investor’s age.
For a young person, more money should be put into equities as risk appetite is more. One can earn better return in a long term with equities.
As one move towards retirement, investment should be done in safer avenues as money guarantee is more important.
If you are below 35 years of age, I would advise you to invest 3500 into mutual funds and 1500 into PPF.
You can choose to invest in Birla Sunlife Frontline equity fund, HDFC Top 200 Fund, DSP Backrock Top 100 fund and Reliance Regular Savings – Equity
Hi Pankaj,
Thanks for sharing useful information.
I need a term insurance. Please suggest me one as per my requirement. I am 26 old now.
I need pure term insurance upto my 60 or 65 years with 30 lakhs coverage. Please suggest which are the plans suit for me.
As we are taking long term insurane i have doubt that whether private insurance are reliable or not? My personal opionion LIC is better. Please suggest me.
Thanks in advance.
@Mothilal
You can buy LIC Amulya Jeevan for 30 Lakhs. Max Policy term will be 35 years (you will be covered till 61 years of age) and annual premium comes out as Rs 9270. You can also get this policy in a single premium for 1,34,800 Rs.
LIC has a less claim rejection ratio than all other private players, so you can go for LIC. Private players are not that bad too, but most of them are new and have to prove themselves first.
Thanks a lot sir! You are really doing a great job by making beginners like me financially knowledgeable .
Please explain step wise how to invest in gold ETF? Whom to approach? When to buy or sell? Where to open demat account? Is broker must? Is gold BeES best indian ETF? Thanks
@Siddharth
You can open demat account and online trading account with any of the companies like Kotak Securities, ICICI securities, Reliance Money, India Infoline, IndiaBulls, ShareKhan, Religare securities etc. Just compare there fixed charges as well as brokerage fees and choose whichever suits you.
Once your online trading account is activated, you would be able to buy or sell gold ETFs like other stocks online. There is no broker/middleman needed here.
Price of the Gold ETFs moves up/down as per current gold prices and most of the ETFs have similar prices at any time. Gold BeES is older one and has most of investment dones till yet out of all gold ETFs available.
please advice mutual fund good return in my children education and marriarge now she is studying 3rd std. and in my age 46
@Sankar
You should divide your investment in Equity and debt funds in ration like 80:20 or 70:30.
Some of the good diversified equity funds, you can invest in are: Birla Sunlife Frontline equity fund, HDFC Top 200 Fund, DSP Backrock Top 100 fund, Reliance Regular Savings – Equity, ICICI Pru Discovery Fund.
You may also choose balanced funds (mix of equity and debt) like HDFC Prudence and Reliance Regular Savings – Balanced.
Hi,
When to choose a divident or growth option for investing in ELSS schemes, could you pl. clarify.
Thanks,
@Sandeep
Regarding which option to choose, Please read this article: Mutual Fund investment options: Growth, Dividend Payout, Dividend Reinvestment