For small investors in the market, there can be no better option than investing in mutual funds. Here one can invest from the small amount of 500 per month also. In the world of mutual funds also one can find a lot of varieties. Various AMCs are there to offer different types of mutual funds with different features. The investor needs to find an option that can prove beneficial to him as per his requirements. The AMCs invest the collected amount of mutual fund in the shares of different companies in the share market. This investment is taken care of by the fund manager who is an expert in the share market and identifies the opportunities as well as risks that are associated with the market. He keeps monitoring the market on a daily basis and switches the same as per the situation or ups and downs in the share market.
Why invest in ELSS?
ElSS is also a type of mutual fund, but it has got some added advantages for the investors. To know what is ELSS funds one need to understand the tax benefits. The government has certain tax brackets and levies the income tax on the people who earn more than a specified amount. Those who fall in such tax bracket and still want to save the amount from being paid as tax can go for the options offered by the government with the help of which one can avoid paying income tax to a certain extent.
The ELSS funds can help one save income tax till the invested amount of 150000. It is exempted under section 80c from the taxable amount. The amount which the investor invests in this fund gets blocked for a period of three years. This means that the investor cannot withdraw the amount from the ELSS for the next three years. The most notable thing here is one can pay the amount in a single payment or can go for the payment of the same with the help of instalments where every month, a certain amount is debited from his bank account and credited to the company.
Those who wonder what is ELSS funds must also know how this investment works. The accumulated fund under this option is invested in the share market under the supervision of an expert, and as per the benefits of the increased value of the shares, the unit price of the units allotted to the investor also increases. Hence one can get a good return in the span of three years when the amount stays invested in the market.
The process of investing in ELSS is also very simple where one can go for the investment in online or offline mode. As a number of people nowadays prefer to have online transactions, it is made simple by the companies where one needs to visit the site of the company, provide a few details and transfer the fund online to invest in the desired option. In offline mode, one needs to meet the agent and fill the application for manually.