Why should you start ELSS from April itself?

Why start ELSS from April itself?

Why start investing ELSS from April itself?  
Tax is on my mind

Tax is in my soul

Tax is in my life

I am just taxing on.

Every taxpayer goes through this during the last quarter of the financial year. Sudden decisions are made without proper planning. To save tax becomes the objective for investing.A lump sum amount is then invested in the Equity Linked Savings Schemes (ELSS). When the Rs 1.5 lakh eligible for deduction is allocated to different asset classes, you heave a sigh of relief. But there is a problem with this method.

It is always better to invest in ELSS through systematic investment plan (SIP). Begin your SIP from April to get the most of your ELSS.

Here’s why you should start investing in ELSS right from the beginning of the financial year:

Equity-linked

As the name suggests, ELSS invest most of the accumulated funds in stocks. Thus, as applicable to every investment in the stock market, you must begin early to get the maximum benefit. Equity is known to give best returns over the long-term. The sooner you invest in ELSS; your funds get more time to multiply. If you begin investing in December/January, you are losing the benefit for nine months.

Rupee cost averaging

Stock markets fluctuate very frequently. So, when you invest in one go, how can you be sure that you got the best price for purchase dunits ? What if the market fell further after you invested Rs 30,000 lump sum in ELSS? Timing the market is a difficult task. To overcome the market volatility, the best thing to do is SIP. On staggering the investment over months in a financial year, the cost of purchase averages out. Thus, if a stock was priced at Rs 100 last month and Rs 200 this month, the average cost of the stock comes to Rs 150.

Encourages monthly saving

When you start ELSS from April, your monthly saving is taken care of. Starting an ECS for SIP ensures that the money is invested directly. With less money in hand, your expenses are controlled as well. Therefore, it is advisable to set the ECS date within 10 days of salary. Since you are awareof the mandatory outgo every month, you plan your finances better for the financial year.

Proper planning

Investing in a hurry at the end of the financial year does not involve sufficient research. When you decide to invest in ELSS from April, you would take efforts to do thorough research and be informed about the product. Having complete knowledge about the fund’s performance will help you take the right decision.

Shift in objective

When you decide to start ELSS from April, instead of last quarter, your objective automatically shifts from just tax-saving to wealth creation. You plan investments properly so as to make your money work for you. Investing in tax-saving instruments without this objective may not prove fruitful. You may save tax, but you may not get good returns.

ELSS is one of the best tax-saving instruments, only when planned properly. Stagger your investment, start a SIP and allow your money to grow by investing in ELSS right from the first month of the financial year.

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