I have been asked the following questions:

Does it make sense to invest in ELSS still?

Is it better to invest in ULIP as ulips are still tax free?

As a senior citizen paying tax at 20% slab should I keep money in Bank FD for getting 80C benefit?

Should I withdraw all my ELSS before 31st March 2018?

Here is my take:

I was always in favor of ELSS – assuming that you have got the Asset Allocation right. So assuming that you want to be in equities for Rs. 150,000 a year, ELSS makes sense. I am normally against withdrawing from any equity fund – except when you need the money or the market has gone up too much AND YOU NEED THE MONEY. Both the conditions are important. In a year that the market has gone up by say 55%, it makes sense to remove some money from equities and use the money. Either for spending or for re-balancing.

In ELSS my earlier stand would be to do a long term sip – say of Rs. 12500 a month, and thus meeting the full 80C needs especially if you are a young investor. Now my strategy changes a little. After your ELSS is more than 3 years old, withdraw Rs. 100,000 of profit from the same. This will allow you to book 1L of cap gains every year (tax free). This will also mean that once your ELSS is about 7 years old, you will not have to put any FRESH money into the same. Just keep withdrawing and re-investing. Sounds odd? well it means doing a SIP of Rs. 12500 and doing a SWP of Rs. 12500 (or whatever it takes to book Rs. 1L profit).

No clue whether the ITO will apply GAAR and …….


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  1. I followed this ELSS strategy previously. Initial 3 years I tried to save maximum amount in my elss. Once 3 years over, i sell the elss which is not in locked in and use that for current 80c. Mostly people need less money for ELSS in later years, because their salary is increased, so the EPF and NPS are all increased.

  2. this is an absolutely stupid strategy – however for a person with not much of an equity portfolio this makes sense. If he/she can book profits from other portions of the equity portfolio, profit booking should happen from there…

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