ELSS Tax saver! An investment avenue to be considered

For investors whose tax situation makes them eligible to stay in the old tax regime, ELSS (Equity Linked Savings Scheme) remains an investment avenue worth considering.

In the hunt for eligible 80C investments, investors often end up investing in debt-like investments with longer term horizons. While these options provide stability, they may not offer the growth potential that equity investments can. This is where the HDFC ELSS Tax Saver comes into play, providing equity exposure that allows for long-term growth prospects.

Key benefits of investing in the HDFC ELSS Tax saver:

> Deduction U/s 80C: Deduction can be claimed by investing in ELSS funds u/s 80C upto Rs 1,50,000/-. (Under the old regime of the Income-tax Act, 1961)

> Exposure to equities with a long term horizon: 3 Year lock in ensures money remains invested for long term, without taking into account short term volatility in equity markets.

> Lower lock-in vs other options: In fact, the Lock in period is lower than other investment options like PPF, NSC or Tax Saving Bank FD’s.

> Decline in interest rates on 80C eligible instruments over the years along with potential for lower rates in the coming years could make an equity investment more attractive.

PPF - Public Provident Fund

NSC - National Savings Certificate

Investors who have chosen the HDFC ELSS Tax saver in the past have seen the benefits of having exposure to the equity asset class within their section 80C savings. The potential for higher returns compared to traditional debt-like investments could make ELSS a better choice.

Unlike PPF, investments in Mutual Funds are subject to market risks. Hence, the performances are not strictly comparable. Past performance may or may not be sustained in future and is not a guarantee of any future returns.

Source: MFI Explorer and other publicly available information. The above simulation is for illustration purpose only. *Year-end balance has been arrived at by adding interest at the rates notified by the Competent authorities from time to time. # Benchmark Index of HDFC ELSS Tax saver. ## Additional Benchmark NIFTY 50 TRI - As TRI data is not available since inception of the scheme, additional benchmark performance is calculated using composite CAGR of NIFTY 50 PRI values from Mar 29, 96 (Data for March 31, 96 is not available) to Jun 29, 99 and TRI values since Jun 30, 99. TRI: Total Returns Index. $$ All IDCW declared prior to the splitting of the Scheme into IDCW & Growth Options are assumed to be reinvested in the units of the Scheme at the then prevailing NAV (ex-IDCW NAV). As NIFTY 500 TRI data is not available for March 31, 96, benchmark performance is calculated from March 29, 96.

With India's equity valuations having moderated considerably, now could be an opportune time to consider making your section 80C investments in a lump sum with a long term view.

The scheme follows a disciplined approach to investing, with a focus on good quality companies while maintaining valuation discipline and long term stock selection. The Scheme can invest across market cap segments, with the allocation based on relative attractiveness of opportunities in each Market Cap segment.

In conclusion, while the new tax regime has shifted the focus for many investors, those who remain in the old tax regime should not overlook the advantages of the HDFC ELSS Tax saver. It offers a balanced approach to tax-saving and wealth creation, along with a diversified portfolio of quality companies with a long term horizon. This makes the fund a worthwhile consideration for your investment portfolio.