You should keep the below points in mind before investing in an ELSS fund:
- Most ELSS funds have a lock-in period of 3 years. That means once you invest in it, you will not be able to withdraw your money before 3 years. This is good in a way as it helps to inculcate investing discipline & prevent premature withdrawals
- ELSS funds are like any other equity fund. So the longer you hold it (min 7 years) the better the chances of getting a great return. There are high chances of incurring a loss if you are looking to invest for a short term
- It’s always better to invest as a lump sum rather than SIP in ELSS funds. If you invest via SIP then each of your investments will get locked for 3 years
- ELSS funds fall under Sec 80C category. So you get the double benefit of equity returns plus tax exemption on your invested amount
- ELSS funds are one of the best tax-saving investment options available in the market right now. So it’s highly recommended that you invest in it.