Reliance Tax Saver Fund: Save Taxes and Become a Millionaire
Tax is an inevitable liability. Every earning individual has to pay income tax if he/she falls under the defined tax slab. However, an informed citizen who is well aware of the wealth gain and tax saving opportunities which are provided by the government of India. Under section 80C of the Income Tax Act, 1961, tax liability can be reduced by investing in ELSS category of mutual funds. Reliance Tax Saver Fund is a prominent scheme in the ELSS category which has allowed thousands of investors to reduce the tax liability and earn capital appreciation on the invested amount. It has an aggressive portfolio and the ability to deliver the highest gains in the favourable market conditions.
All you Need to Know About ELSS Mutual Funds
Equity Linked Savings Scheme (ELSS) category of mutual fund which is also known as tax-saving funds are the mutual funds which invest 100% of the corpus in pure equity instruments with a lock-in period of 3 years. These funds allow the investors to reduce the tax liability and earn capital appreciation on the invested amount. Investments in these funds can reduce the taxable income by a maximum of Rs 1.5 lac every financial year. Apart from the tax deduction, it provides better wealth gain opportunities as the fund manager directs the invested amount in equity instruments of the best-performing companies. Tax is implicated for the betterment of the nation and by investing in pure equity mutual funds with a lock-in period of 3 years, one is eventually contributing towards the growth of the nation hence tax liability is exempted up to a certain limit by the government. A maximum of Rs 46,800* can be reduced from tax liability every financial year.
How Good is Reliance Tax Saver Fund G?
Reliance Tax Saver Fund is a largely chosen ELSS mutual fund which follows a slightly aggressive investment strategy to provide higher gains on the tax saving investment. It has the ability to provide higher gains than the peers under the favourable market conditions. This aggressive tax saving fund was launched by Reliance Mutual Fund in September 2005 to accommodate tax saving for the investors with a high-risk appetite. The performance of the scheme has been controversial in the neutral and negative phase of the equity market as the portfolio is slightly inclined towards the aggressive stocks. The long term returns, however, have been superior.
Reliance Tax Saver Fund Growth : Key Features
- Reliance Tax Saver Fund allows investors to reduce tax liability by up to Rs 46,800*.
- It has the ability to deliver the highest gains in the bullish phases of the market.
- Long term returns of the scheme are better than the benchmark and category average.
- It has the least lock-in period among all the other tools under Section 80C.
- It can provide better returns than any tax saving option under section 80C.
- The option of SIP or periodic investment allows convenient tax planning.
- By choosing SIP mode of investment, one can take advantage of the power of compounding.
- The SIP option also reduces the risk as the investment is done at different NAV and the overall investment is averaged out.
- This ELSS Scheme has a higher allocation in the small and mid-cap category.
- It is managed solely by Mr Ashwani Kumar since August 2005.
- It is chosen by a large number of investors and the AUM is above Rs 10,000 crore.
Reliance Tax Saver Fund - Investment Style
The fund manager Mr Ashwani Kumar has been handling the portfolio of Reliance Tax Saver Fund Growth for a long time now. He has always preferred an aggressive portfolio for the scheme by doing a higher allocation in small and mid-cap stocks. Apart from this, higher allocations have been done in the sensitive sector like Automobile and Engineering while the manager remains underweight on the cyclical and defensive sectors. The stocks are selected by a mix of top down and bottom up strategy and the investment is done with the blend of growth and value investment style. In simple words, stocks with better growth potential are selected and the investment is done at a reasonable price. This is also known as Growth At a Reasonable Price (GARP) approach.
What Can be Gained?
Due to the aggressive portfolio, the performance of the fund remains market agnostic and remarkable returns can be gained under positive trends. The returns can also be drastic if the market conditions are unfavourable. However, investment in an aggressive portfolio must be done for the long term. Investors must note that for SIP investment, each instalment must be held for 3 years to complete the lock-in tenure before it can be withdrawn. Although, due to the aggressive portfolio, the investments must be accumulated for 5 years or more to gain better returns. Investors can expect the annualised return of 12-15% in the long term. To know how much you can earn on your mutual fund investments, use the SIP calculator to predict the expected gains during a known period. To know how much can be saved from tax liability, use the Tax calculator tool which can allow you to calculate the tax implications and amount that can be saved by investing in an ELSS mutual fund.
Who Should Invest?
Reliance Tax Saver Fund has a high-risk portfolio and is suitable for the investors who wish to reduce the tax liability by investing in a high-risk portfolio. The investors must be ready to witness frequent fluctuations and volatility in the NAV for the short term but the long term gains are likely to be highly rewarding. The investment tenure must be of long term and the risk appetite should be high. Potential investors must note that it must only be chosen for tax saving purpose and not only for wealth gain opportunities.
The minimum amount of starting a SIP in reliance tax saver growth scheme is Rs.500 only. The loads for entry and exit in Reliance Tax Saver ELSS Fund scheme are zero which is an added advantage for the investors but the expense ratio has to be paid to the AMC. By offering growth option for investing the funds, Reliance Tax Saver ELSS Fund aims to accumulate wealth for the investors in the long-term duration.
If you are looking for a tax saving investment in a high-risk portfolio, consider investing in Reliance Tax Saver Fund Growth at MySIPonline. You can also take the assistance of professional financial experts regarding investment and fund selection.