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As a mutual fund advisor, I often help clients tackle tax-saving challenges. Recently, I had a chat with my client and friend, Priya, about how to save on taxes while growing her wealth with top tax saving mutual funds. Here’s how our conversation went, and I think you’ll find it helpful too!
Priya’s Dilemma: The Tax Woes
Priya:
“Hey Ashwini, I’ve been hearing a lot about taxes lately, and I’m honestly feeling a bit stressed. With my income growing, I’m worried about how much I’ll have to pay. Do you have any suggestions for reducing my tax liability?”
Ashwini:
“I totally understand, Priya! Taxes can be overwhelming, but don’t worry, there’s a simple way to save taxes and grow your wealth at the same time. Have you heard about ELSS funds?”
What Are Tax Saving Mutual Funds (ELSS Funds) ?
“Hmm, ELSS? I’ve heard the term, but I’m not entirely sure how it works. Can you explain?”
Ashwini:
“Of course! ELSS stands for Equity-Linked Savings Scheme, and it’s a type of mutual fund that primarily invests in stocks. These funds allow you to save taxes under Section 80C of the Income Tax Act.
By investing in these funds, you can save up to ₹1.5 lakh in taxes. The best part? They come with a 3-year lock-in period, meaning you’ll be invested for at least 3 years, and during that time, your money can grow and deliver great returns. Plus, since the tax deduction limit for Section 80C is ₹1.5 lakh, ELSS funds help you maximize this benefit while giving you high-growth potential.”
Why ELSS Funds Are Worth Considering
Priya:
“Okay, I see the tax benefits. But since the money’s locked for 3 years, does it really grow much? Is it worth it?”
Ashwini:
“Absolutely! The lock-in period encourages long-term investing. Over time, ELSS funds can provide strong returns, especially since they invest in equities (stocks). This makes them a better option for tax-saving compared to others like PPF or NSC, which tend to offer lower returns. With ELSS, you’re not just saving taxes—you’re also giving your money the potential to grow.”
Top Tax Saving Mutual Funds (ELSS Funds) to Consider for 2024
Priya:
“Okay, I’m interested now! But there are so many options out there. Which ELSS funds do you recommend for 2024?”
I shared a few top funds that I personally recommend, based on their performance, stability, and growth potential.
Axis Long Term Equity Fund
This fund is one of the top picks for anyone looking for stability and solid performance. It mainly invests in large-cap stocks, which are large, established companies. These stocks are known for their stability and steady growth. The fund has delivered consistent returns over the years, making it a reliable option for long-term wealth growth and tax savings.
Mirae Asset Tax Saver Fund
If you’re looking for a good balance of risk and reward, Mirae Asset Tax Saver Fund is a great choice. This fund invests in both large-cap and mid-cap stocks, giving you the potential for growth while keeping the risk under control. It’s perfect if you’re willing to take on a bit more risk for higher returns.
Aditya Birla Sun Life Tax Relief 96
For those who prefer a more conservative approach, Aditya Birla Sun Life Tax Relief 96 is a great option. It has a long track record of delivering solid returns, and its diversified approach helps manage risk. It invests across various sectors, so you can expect stability along with moderate growth.
Franklin India Taxshield
If you’re someone who values stability, Franklin India Taxshield is a fund you can consider. This fund mainly focuses on blue-chip stocks, which are large companies that are well-established in the market. These stocks tend to be less volatile, making this fund ideal for investors who prefer steady and predictable returns.
Choosing the Right ELSS Fund for You
Priya:
“These all sound good, but how do I decide which one suits me best?”
Ashwini:
“Good question! It depends on your risk tolerance and investment goals. If you’re someone who prefers stability and lower risk, I’d suggest Axis Long Term Equity Fund or Franklin India Taxshield. But if you’re comfortable with a little more risk for the potential of higher returns, Mirae Asset Tax Saver Fund or Aditya Birla Sun Life Tax Relief 96 would be great picks for you.”
Priya’s Decision: A Real Life Example of ELSS Investment
After considering all the options, Priya decided to go with Mirae Asset Tax Saver Fund for its balanced approach. She felt it offered the right mix of growth and risk, and of course, the tax-saving benefits made it an even better choice.
Priya:
“I think I’ll go with Mirae Asset Tax Saver Fund. It seems like a good balance of risk and growth, and I love the idea of saving taxes while investing for the future.”
Ashwini:
“Great choice, Priya! Just remember to stick to your plan, invest to save tax and keep investing regularly. Over time, you’ll see the benefits of staying invested for the long term, both in terms of wealth creation and tax savings.”
Key Takeaways on Tax Saving Mutual Funds (ELSS Funds)
Here are the main takeaways from my chat with Priya about ELSS funds and tax saving mutual fund options:
- ELSS Funds are an excellent way to save taxes under Section 80C while growing your money through equity investments.
- These funds have the potential to provide higher returns than traditional tax-saving options like PPF and NSC.
- When choosing an ELSS fund, consider your risk tolerance and financial goals. Some funds offer stability, while others may give you the chance for higher growth.
Conclusion
Investing in ELSS Funds under Section 80C for tax saving is a smart financial move. Not only do you get the benefit of tax deductions, but you also get the opportunity for your money to grow over time. If you’re looking for a way to save taxes and build wealth for the future, ELSS funds are worth considering. invest to save
This was a real conversation between Priya and me, and I hope it sheds light on how you, too, can benefit from tax-saving mutual funds. If you have more questions about tax-saving mutual funds or need personalized investment advice, feel free to reach out to me here or through my contact details. I’m always here to help
If you need expert guidance on where to invest to achieve your financial goals, contact Ashwini Wealth Advisory today.
Call us at: 98459 61990 Email: ashwini@ashwiniwealthadvisory.com
Disclaimer: Past performance is not an indicator of future results. Always consult with a financial advisor before making any investment decisions