As a regular salaried employee, I has so many worries that it was almost impossible to consider any kind of good investments. When the tax time approached, I would just go buy some NSCs or invest in a PPF scheme. I knew that the interest rate was low, but at least I was saved of the ordeal of studying the many other options available.
This was the case until a new batch of younger generation employees were recruited in my office. I have to accept that their approach is quite different. They saw tax savings as revenue earning sources. Of course, it was not for the lack of knowledge that I didn’t prefer ELSS mutual funds online, it was for the fact that I didn’t have good advisors.
Shift in Thought
Seeing the young breed investing successfully in ELSS and other such instruments, and seeing them make good returns, I decided to give it a shot. I got the basics from them and started reading financial newspapers regularly. While the newspapers were knowledgeable, I got most of the information online.
There are some really good websites that provide daily updates, scholarly insights, and also information for the ‘first time’ investors. First, it took some time for me to acquaint myself with the technical jargon. Once I was familiar with some of the terminology, I started getting a grasp of the functioning of ELSS.
Informed Investment
Instead of going by hearsay or advices given randomly, I decided to invest in ELSS after getting information only from the experts. After seeing quite a few websites, I found one site that had good user interaction. I would regularly pose them questions and they would promptly answer them.
I choose this website to be my advisor. I started asking them about ELSS and all the detailed information regarding them. After some sessions, I came to an understanding that investing in the top ELSS mutual funds would be a lot safer.
I invested around 50,000/- for the first time, and every day after the markets close, I would check the NAV of the fund. At first, I was a bit disappointed at the lack of growth. Then, my younger colleagues assured me that growth would not be instantaneous, and I would have to be patient.
The lock in period
The three-year lock in period was quite a journey for this closed-end fund, but the positive aspect was that I chose the dividend option. This dividend was tax free! After the completion of the lock in period, I cashed the fund. I was richer by the dividend amount and I further invested in ELSS funds.
Also, with the lock in period, there was be no capital gains tax. The exercise for me now is to balance between the time period, returns, and volatility.
Online equity linked saving scheme