After having looked at features of various Section 80C investments, except for the guaranteed return feature, ELSS scores gold over other alternatives. Most importantly ELSS funds have lower lock in period and offer better tax treatment on returns as compared to other tax saving instruments u/s 80C .
Meanwhile the concern of no guaranteed returns should not really be your concern, as investment made under 80C category is anyways long term in nature. Why do we say this???... Well we don't say this just because that's what successful investors have claimed. Rather to prove it to you, we have a brilliant track record established over a 20 year period for BSL Tax Relief 96 fund. We promise you that the numbers in the below table would make you wonder why has ELSS as a category not received its due for so many years.
Suppose if it was not for ELSS, your investment would anyways be locked-in for 5 years in any other 80C instrument. Thus assuming you would have invested the same money in BSL Tax Relief 96 fund on any random day during the tenure of the fund and stayed invested for at least 5 years, your 80C investment would have made you much richer and given you more than just the tax benefit.
| Key performance highlights of BSL Tax Relief 96 Fund | Investment Period 3 years | Investment Period 5 years | Investment Period 7 Years |
| Return on an average made if you would have made investment on any random day during tenure of the fund | 29.1% (annualized return) | 24.4% (annualized return) | 24.7% (annualized return) |
| % times investment has fetched positive return | 88.61% | 97.4% | 100% |
| Maximum Return | 141.9% (annualized return) | 56.0% (annualized return) | 51.4% (annualized return |
| Minimum Return | -21.7% (annuazlized return) | -4.3% (annualized return) | 4.0% (annualized return) |
| % times investment has fetched more than 10% CAGR returns | 68.7% | 80.7% | 84.2% |
| % times investment has fetched more than 20% CAGR returns | 58.0% | 55.1% | 58.3% |
Thus two key takaways from the above study are that:
- Timing the market is irrelevant - Without timing the market, chances that you would have made a positive return on your ELSS investment (investment made on any random day for a 5 year period) was 97%. Infact if investment was extended for 2 more years, your investment in BSL Tax Relief 96 fund would have never fetched you negative returns.
- Guaranteed return is not a benefit if investing for long term: If your investment in BSL Tax Relief 96 fund would have been for at least 7 years, the minimum return delivered by the fund would have been very near to tax adjusted FD returns. However chances your investment would have made returns more than 10% (more than any guaranteed return schemes) would have been massive 84%.
Top 10 Tax Saving Mutual Funds to invest in India for 2016
Best 10 ELSS Mutual Funds in india for 2016
1. BNP Paribas Long Term Equity Fund
2. Axis Tax Saver Fund
3. Franklin India TaxShield
4. ICICI Prudential Long Term Equity Fund
5. IDFC Tax Advantage (ELSS) Fund
6. Birla Sun Life Tax Relief 96
7. DSP BlackRock Tax Saver Fund
8. Reliance Tax Saver (ELSS) Fund
9. Religare Tax Plan
10. Birla Sun Life Tax Plan
Invest in Best Performing 2016 Tax Saver Mutual Funds Online
For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call
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