When you start earning money in your life, it is essential to understand two things: Savings as well as Tax Savings. This is because these two factors will help you create and preserve your wealth in the long run for you and your loved ones. Well, if your salary is taxable, then you already searched the internet for the “best mutual fund to invest today”, hoping to save on taxes.
In order to have a stable financial life, it is essential to have a plan of action in mind. When we talk about financial planning, it is basically the process of taking a comprehensive look at your current financial situation and creating a plan to reach your goals.
What are tax saver mutual funds?
Also known as Equity Linked Saving Schemes (ELSS), these mutual funds offer tax benefits to potential investors. These benefits are claimed under Section 80C of the Income Tax Act 1961. When you, as an investor, plan to invest in these type of funds, your prime goal is to save taxes of up to Rs 1,50,000/-.
This is because by investing in these, you can easily claim a deduction of up to Rs 1,50,000/- in a financial year from your total taxable income.
Compared to the other traditional tax-saving investment options such as Public Provident Fund (PPF), Tax Saving Fixed Deposits etc, it has the potential to generate higher returns. Moreover, as these funds have a lock-in period of three years, these funds primarily invest in the company’s equity shares.
How tax saver mutual funds work?
● Potential for Higher Returns
This type of fund primarily invests in equities and has the potential to generate higher returns over the long term than other asset classes.
● Professional Fund Management
ELSS funds are managed and handled totally by professional fund managers. These experts have the right knowledge to make investment decisions based on market conditions and economic trends.
● Potential returns
Since these funds invest in equities, they have the potential to generate higher returns compared to other tax-saving schemes. However, it is essential to remember that returns are subject to market risks and can quickly fluctuate as well.
● Flexibility after 3 years
Once the lock-in period, generally 3 years, ends, investors can redeem their units partially or even fully. They can receive the redemption proceeds or stay invested based on their financial goals.
● Short lock-in period
ELSS funds have a lock-in period of three years. This is the shortest among all the tax-saving investment schemes under Section 80C. So if you invest in the top tax saver mutual funds 2023, you can easily withdraw it after three years, making it a more liquid investment option.
Which are the Best tax saver mutual funds to invest in 2023?
- Quant Tax Plan Fund
- Parag Parikh Tax Saver Fund
- Mirae Asset Tax Saver Fund
- Canara Robeco Equity Tax Saver Fund
- Bandhan Tax Advantage (ELSS) Fund
- PGIM India ELSS Tax Saver Fund
- Mahindra Manulife ELSS Fund
- Bank of India Tax Advantage Fund
There are many applications available on the App Store/Play Store, such as Bajaj Finserv, Groww Stocks, ET Money, Coin by Zerodha etc., which you can use to invest in these funds.
I’ve personally experienced Bajaj Finserv, and it is quite a good app when it comes to investments. Super easy and convenient to use. Highly recommended!