Even though this is not the tax season, I do get a lot of questions related to ELSS.
Let me enumerate them:
1. Should I invest in ELSS?
2. Is there a lock in? When does the lock in start and when does it end?
3. What rate of interest will I get (yes, still this question keeps coming!)
4. Should I take the dividend option?
and a million others. Surely there are enough people who can answer these questions ( I presume industry experts will do so happily, and they can get a MF to sponsor the replies too!).
However 2 questions where my answer is different are:
1. Should I invest in an ELSS to save tax?
2. If the lock-in is over should I remove the money?
Industry answer: No, of course not. Let it remain in the same fund, and it will do well.
My answer: Yes, remove the money as soon as the lock in is over. As no new investments are expected to come into such schemes (post DTC implementation, I presume) the AUM in these schemes will keep falling. When the aum falls the asset management charges will go up – and go up steeply. This is because most ELSS schemes do not have too much money (SBI of course is an exception).
So if you have moneys lying in ELSS past the 3 year lock in period, just pull the plug. Then reinvest in a good mutual fund or direct equity – as per your style preference.
My view? choose Hdfc Equity, Hdfc Prudence, Templeton India Equity Income fun, Franklin India Bluechip, Prudential Icici Discovery…..
ps: want my Broker’s code number? L O L
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