Here’s Why The Equity Linked Savings Scheme (ELSS) Should Be A Part Of One’s Retirement Plan

1. HERE’S WHY THE EQUITY LINKED SAVINGS SCHEME (ELSS) SHOULD BE A PART OF ONE’S RETIREMENT PLAN After having slogged for substantial periods of their lives to make ends meet and fulfill responsibilities, senior citizens deserve to rest and devote time to themselves. However, financial insecurities often keep them at tenterhooks and cause them to worry about their sustenance. The good news is that investing in the right schemes during one’s youth can help one lead a financially secure and independent life post retirement. The Equity Linked Savings Scheme (ELSS) is one such investment plan one can consider from a long-term perspective. ELSS is primarily known for being a tax-saving equity mutual fund with exclusive tax-benefits in the form of tax-free dividends. However, the possibility of earning high returns through its equity investments, together with its tax-saving feature makes ELSS a relevant investment to consider as part of one’s post-retirement plans. 1.What is ELSS All About? The Equity Linked Savings Scheme or ELSS is an investment scheme that majorly deals with investment in securities pertaining to stocks or equities. In some cases, bond funds may also be included as a small part of the securities. It is widely opted for by investors across the country as a major tax saving mutual funds investment. If an investor’s yearly investment amount is up to INR 1, 50, 000/-, they can enjoy tax-free dividends by investing in ELSS. Such a scheme has always encouraged investors to consider ELSS as their primary investment option. While it is often viewed as a risky investment scheme as it majorly deals with equity investments, it can also prove to be extremely advantageous in the long-run if one invests in the right avenues.

2. 2.How to Go About With an ELSS Investment The ELSS investment can be carried out in two ways – either by investing a lump-sum amount or in multiple instalments in the form of a Systematic Investment Plan (SIP). The latter option is a more organized investment method that enables the investor to provide fixed amounts of money at regular intervals. This also reduces the risk-levels of investing in stocks. 3.Why Should an Investor Consider ELSS as Part of his/her Post- Retirement Plan? There are a number of schemes available to an investor while considering investment from a long-term perspective – including the IPO stocks, mutual funds investments with multiple securities, new NFO mutual fund and so on. Then why should one consider ELSS as part of their post-retirement plans? Here are some reasons why ELSS may work for an investor as a post- retirement investment scheme: a.Exclusive Tax Benefits Under Section 80C of the Income Tax Act, the investor can reap tax benefits in the form of tax-free dividends under the ELSS investment scheme, if the yearly investment amount is up to INR 1, 50, 000/-. This ensures that the investor saves on tax amount while also receiving high returns on the investment amount. Such tax saving mutual funds can also prove to be advantageous from a long-term perspective. Owing to its tax-benefits, ELSS can be extremely cost- effective for investors who are trying to save up for their post-retirement years. b.Saving Today for a Better Tomorrow Investing in ELSS by means of a Systematic Investment Plan (SIP) allows one to inculcate the habit of investing fixed amounts of money at regular intervals so as to reap the benefits later. While the lock-in period – i.e. the time-period up to which the investor is not allowed to liquidate the policy – is only 3 years in

3. an SIP investment, one may continue to regularly invest in the ELSS fund instead of redeeming the amount immediately after the lock-in period is completed. Then, at the time of one’s retirement, these funds may be redeemed to yield high returns. Coupled with the tax benefits of the ELSS scheme, investing regularly in this manner can prove to be very beneficial from a long-term perspective. c.Higher Returns Through Equities As the name suggests, the Equity Linked Savings Scheme is majorly about investing in stocks. While any stock-linked investment comes with its risk- factors, it also holds the possibility of earning very high returns in future. Such an investment may outperform other mutual funds investments and bond- linked investment schemes in the long run. While investing in any scheme, especially ones that deal extensively with stocks, one cannot totally overlook the risks involved. The same goes with the Equity Linked Savings Scheme. However, if the investor exercises the necessary precautions before investing – including researching about the company thoroughly and associating with a reliable brokerage firm – he/she can minimize the risks and maximize the long-term gains to ensure an independent and secure life post retirement.