Mistakes to Avoid in ELSS Investment Rush Before March 31
The deadline March 31 is approaching fast, and many taxpayers are yet to sew up their tax planning for the year 2016-17. Some of them are unfamiliar with the tax rules, while others are either confused by the array of options or just plain lazy. Whatever be the reason, they are looking out for the distributors and financial advisors who can help them in managing taxes for the current financial year. Here are some of the factors which you need to avoid when you are going for a tax-saving investment in mutual funds.
Avoid the Schemes You Don’t Need
You need to understand that tax planning is only a small component of your investment portfolio, and thus, you must choose the schemes that you are investing for tax benefits keeping your financial goals in mind. Many investors end up buying investment products at the last minute and then regret it later. This is why you need to opt for those ELSS schemes which are aligned with your overall financial needs.
In addition to this, avoid investing in the tax-saving schemes for the short-term requirement of tax benefit. It is essential to analyse the scheme prior to investing to make sure that it offers considerable returns as well. The Equity Linked Saving Scheme investment is eligible for deduction under section 80C of Income Tax Act, 1961. It tends to provide capital appreciation as well due to investments in the equity stocks of companies. But, before buying an ELSS, you must make sure that the scheme holds investments in promising sectors and companies in order to build a corpus for your future.
Avoid the Wrong Mode of Investing
Mutual fund investments are made either via SIP or by making a lump sum purchase. While SIPs are considered the best way of investing, one needs to opt for the mode that suits one’s current requirement. SIPs are more favourable when you are investing since the beginning of the year with a small amount as it adds up to provide you with a tax exemption of a higher amount. The lump sum purchase allows you to invest a huge amount at a single point in time. At the year end, investing a small amount in SIP would not be as beneficial for the investors as a lump sum investment of a higher amount would be. Accordingly, you must make the right choice of the mode of investing in the ELSS funds so as to gain higher value and benefits on your investments.
Avoid the Products You Don’t Qualify for
It is a must for the investors to stay updated with the latest government and other notifications. There are certain provisions related to every investment product for which the investors have to bear certain conditions to start investing. For example, the benefits of tax saving under Rajiv Gandhi Equity Savings Scheme (RGESS) are available to the investors only if they are a first-time equity investor. The financial advisors often recommend the products which provide them with high earnings. It’s your responsibility that you invest your money in the schemes which are best suited to your needs and do not let your hard-earned money go wasted.
Mistakes are a part of life, and they help us in learning new things. But wherever money matters are involved, it is essential to remain concerned. You too might be indulged in planning your taxes this year and would be looking for better financial advisors to help you in guiding the right way. ELSS investments can help you save on your taxes and earn good returns.
You must get associated with our financial advisory team available free of cost. We, at MySIPonline, have been providing the online investment services since a long time and have been successful in guiding the right way to the investors. Avail our services to start your tax planning for the year 2016-17 now.
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