Investing in ELSS (Equity Linked Savings Scheme) mutual funds is an excellent way to save tax while earning potentially high returns. ELSS mutual funds invest predominantly in equity shares of companies across different sectors and market capitalizations. In this article, we will discuss the steps to invest in ELSS mutual funds in detail.
Step 1: KYC Compliance
The first step to investing in ELSS mutual funds is to ensure that you are KYC compliant. KYC or Know Your Customer is a regulatory requirement to verify your identity and address proof. You can complete your KYC process by submitting your Aadhaar card, PAN card, and other documents as required to the respective mutual fund or a KYC registration agency.
Step 2: Selection of ELSS Mutual Funds
The next step is to select the ELSS mutual fund(s) you want to invest in. You can compare the different mutual funds based on their past performance, portfolio composition, expense ratio, fund manager experience, and risk-return profile. You can also consult with a financial advisor to determine which ELSS mutual fund would be the most suitable for you.
Step 3: Registration with the Mutual Fund Company
Once you have selected the ELSS mutual fund(s) you want to invest in, you need to register with the mutual fund company. You can visit their website or visit a nearby branch of the mutual fund company and submit the necessary documents along with the application form. You can also invest in ELSS mutual funds online through various online platforms that offer mutual fund investments.
Step 4: Investment Amount and Mode of Investment
After registration, you need to decide the investment amount and the mode of investment. You can invest either through a lump sum or a systematic investment plan (SIP). Lump sum investment means investing a significant amount of money at once, while SIP involves investing a fixed amount at regular intervals, say monthly or quarterly.
Step 5: Payment
Once you have decided on the investment amount and mode, you need to make the payment. You can make the payment through various modes, such as net banking, debit card, cheque, or NEFT/RTGS. After the payment is received, the mutual fund company will allot units based on the prevailing NAV (Net Asset Value) of the scheme.
Step 6: Track and Review Performance
After investing in ELSS mutual funds, you should regularly track and review the performance of the scheme. You can track the NAV of the scheme, its portfolio composition, and returns through various online platforms, including the mutual fund company’s website. You should also review your investment portfolio periodically and rebalance it if necessary.
ELSS mutual funds offer tax-saving benefits along with the potential for high returns. To invest in ELSS mutual funds, you need to complete your KYC process, select the mutual fund(s), register with the mutual fund company, decide the investment amount and mode, make the payment, and track and review the performance of the scheme. With proper research and guidance, ELSS mutual funds can help you achieve your financial goals while also saving on taxes.