10 Best Investment Options To Save Tax

2. Equity Linked Savings Scheme (ELSS)

The tax saving mutual fund schemes do carry an embedded market risk and calls for investor prudence before making an investment decision but their returns are equally rewarding and tax free in the hands of the investor. ELSS has some advantages over other investments and thus people who possess moderate to high risk appetite should consider them seriously. Some key features of ELSS include lock-in period of 3 years, diversified equity investments, systematic investment planning (SIP) available, tax exempted in dividend paid out and different funds for different risk profiles in terms of exposure to large cap, mid cap and small cap.

Apart from these features there are two different schemes that you can choose in ELSS for instance dividend option and growth option, in both the options tax treatments are the same. Do sufficient research before taking investment decisions, which should match your overall financial situation, goals and risk profile. SIP is the most recommended way to invest in equity funds for a long time horizon and try avoiding lump sum investments especially when the market is on an upward mode.

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