Tax Saver Mutual Funds are those mutual funds which are eligible to deduction under Section 80C and These are popularly referred to as Tax Saver Mutual Funds.
There is no maximum limit on the amount which can be invested in Tax Saver Mutual Funds. However, the deduction under Section 80C would be limited to Rs. 1.5 Lakhs.
To make your task of choosing the right tax saving mutual funds easy, we have put
together a bunch of schemes you may consider investing to save taxes this year.
Here are a few pointers before you proceed:
#1.one, Do not invest in ELSS (Equity Linked Savings Schemes) just because they have the potential to offer superior returns over a long period. You should invest in ELSS only if you have the risk appetite to invest in an equity scheme. Equity, as you would know, is risky; it can also be volatile in the short term.
Of course, it has the potential to offer superior returns over a long period. However, that alone need not be your criteria to invest in ELSS.
If you don’t have the risk appetite, do not invest in them. Just remind yourself that they invest mostly in stocks.
Sacrifice those extra returns and be happy with the traditional favourites like Public Provident Fund (PPF), 5-year bank deposit, and so on.
#2.Two, you must have heard the sales pitch that ELSS funds have the shortest mandatory lock-in period of three years among the tax-saving investment options available under Section 80C.
Yes, tax saving mutual funds have the mandatory lock-in period of only three years. However, that doesn’t mean you should invest in them with a horizon of just three years in mind.
Since they are essentially equity mutual fund schemes, you should invest in them with an investment horizon of at least five to seven years.
Finally, include ELSS in your overall financial plan. They are ideal to meet your long-term financial goals.
You need not rush to redeem them as soon as they complete the mandatory lock-in period of three years. You may hold on to these schemes as long as they are performing well
If you still qualify to invest in ELSS funds but don’t know which schemes to choose, here is help.
Here are our recommended Equity Linked Saving Schemes or tax saving mutual funds to invest in 2019.
Best tax saving mutual funds to invest in 2019
|Motilal Oswal Long Term Equity Fund|
|Aditya Birla Sun Life Tax Relief 96|
|L&T Tax Advantage|
|Invesco India Tax Plan|
|Axis Long Term Equity Fund|
|Mirae Asset Tax Saver|
|DSP Tax Saver|
|Principal Tax Savings Fund|