Tax saving is one of the most important parts of wealth creation as it helps individuals reduce their taxable income and utilise it to meet various needs. Most individuals may prefer the Equity Linked Savings Scheme or ELSS among the several tax-saving instruments. This is because these mutual funds not only help investors save tax but may also have the potential to grow their wealth by investing in equity-linked instruments. This article explains what tax saver funds are, how mutual fund apps make investing in ELSS funds easier, and how to invest in these funds with a mutual fund app.
Basics of Tax Saver Funds
The basic aim of tax saver funds, especially ELSS funds, is to allow individuals to reduce their tax liabilities under Section 80C of the Income Tax Act of 1961, and potentially obtain more gains than traditional savings instruments. These funds primarily invest in equity and equity-related instruments, offering investors the potential for long term capital appreciation. Some of the benefits of ELSS funds are:
- In every financial year, investors can claim deductions up to Rs. 1.5 Lakh.
- The mandatory lock-in period of three years is the shortest among various tax-saving instruments.
- After investing in ELSS funds, investors can choose between growth and dividend payout options. The growth option reinvests potential earnings, while in the dividend option investors are rewarded with a part of the earned profits.
- The overall yield of these equity-related instruments is directly dependent on the market’s performance.
Mutual Fund Apps – Making Tax Saver Fund Investments Easier
By providing an easy-to-use platform, mutual fund apps have made investing in tax-saving funds simpler. Some of the other ways in which these apps have transformed investing are:
- Availability: Managing investments became easier with these mutual funds apps. Users can make transactions and balance their portfolios on the go or in the comfort of their homes.
- Swift Transactions: The secure payment structure allows a mutual fund app user to save tax at the last minute by swiftly investing in tax-saving funds.
- Valuable Insights and Research Reports: To assist investors in making informed decisions about their ELSS investments, various mutual funds apps provide insights into current trends and reports that contain in-depth research about the various ELSS funds.
- Purpose-Driven Investments: Various mutual fund apps allow users to invest for a set financial goal. Additionally, it also provides the feature of tracking the performance of their investments.
- Affordable: As compared to traditional investment methods, mutual fund apps charge fewer fees as the need for paperwork is reduced. This allows investors to potentially increase the yield of their investment.
Investing in Tax Saver Funds With Mutual Fund Apps
By following the steps given below, investors can invest in tax-saving funds with mutual fund apps.
Step 1: Downloading the App and Create an Account – After downloading a reliable mutual fund app, create an account by providing basic details such as name, email ID, contact number and PAN number.
Step 2: KYC and Exploring Funds – To complete the KYC verification, individuals must submit documents such as an Aadhaar card and a passport-size photograph other than a PAN card. After completing the verification, compare various options of ELSS funds or other tax-saver funds based on their performance, expense ratio and potential risk associated with the fund.
Step 3: Select Appropriate Fund and Choose Amount – Investors must choose a fund that aligns with their investment goals and risk appetite. While selecting, investors must consider various factors such as the historic performance of the fund and the expertise of the fund manager.
Step 4: Choosing the Mode of Investment – Investment in these funds can be done in two ways: Lumpsum or Systematic Investment Plan (SIP). While SIP allows you to regularly invest small amounts, the lumpsum investment allows users to invest large capital in a single transaction.
Step 5: Monitoring your Investment – Based on fluctuating market conditions or investment goals, continuously monitoring your investment and making the necessary adjustments is important.
Conclusion
Tax saver funds are multifunctional since they help individuals reduce tax liabilities and also invest in the equity markets. With mutual fund apps, investing in various tax saver funds such as the Axis ELSS tax saver fund, allows investors to potentially grow their capital and save tax up to Rs. 1.5 Lack under Section 80C of the Income Tax Act. Furthermore, these apps have made performance-driven investments simple and affordable. By downloading a reliable mutual fund app, and selecting the appropriate fund and mode of investment, investors can start their tax-saving journey.
