It’s the time of the year when companies start asking employees to submit their proofs for investments for tax saving. And all of a sudden you realize you haven’t actually even thought about it. What follow is chaos & wrong investments.<\/p>\n
The storey is almost at this stage for one of my colleagues. We need to submit our investment proofs by end of next week & he is freaking. After talking to few people he’s convinced that ELSS (Equity Linked Saving Scheme) or Tax-Saving Mutual Funds as they are popularly known as is the best way. But the next question is which ELSS to invest into?<\/p>\n
As of today there are around 51 open ended ELSS schemes in India and as Financial Year end approaches you would see a lot of New Fund Offers getting launched. So obviously it\u2019s not an easy choice. Let’s see what can be done and how we can choose the best 2-3 schemes from the existing 51.<\/p>\n
Step 1:<\/strong> Have a list of All Tax Saving Funds with all details.<\/span><\/p>\n There are many websites where you can find such information. My favorite for all kind of information on Mutual Funds is http:\/\/www.valueresearchonline.com\/.<\/p>\n Here is list of all Tax saving Funds with all kind of details you require. Since you cannot compare all the funds at a time, you need to short list some funds. I explain this in Step 2.<\/p>\n Step 2:<\/strong> Select Rating as 4 or 5 star funds.<\/span><\/p>\n Valueresearchonline rates the funds using some proprietary mathematical model. But 4\/5 star rated funds means they have given better risk adjusted returns than their peers in long term. At the end of step 2 we have following 8 funds:<\/p>\n All the above funds are good funds with at least 3 years of track record. So from here we need to reject rather than select from the list above based on our preferences & criteria.<\/p>\n Step 3:<\/strong> My Rejection Criteria 1: I want Funds with Return Grade: High\/ Above Average and Risk Grade: Low\/ Below Average only.<\/span><\/p>\n So now I have just following 5 funds left with me<\/p>\n All these 5 funds are great funds to invest and frankly speaking you cannot predict which would give the Best returns after 3 years. But their historical trends and investment style atleast assures that they should give stable above average returns in next 3 years.<\/p>\n How many Tax Saving Funds I should invest into?<\/span><\/p>\n I think there is no right magical number for this. But if you are investing a small amount then pick one fund and if you are doing your entire tax saving by ELSS investment you can go for 2 funds.<\/strong> But more than 2 funds is not recommended in any case as it leads to over diversification, lots of paper work while investing & redeeming and also you would need to track more funds.<\/p>\n What more criteria\/preferences can I use to choose 2 funds from your list of 5?<\/span><\/p>\n As I said all the 5 funds are great and well proven. You can randomly pick any 2. But if you still want to do more work you can use the following criteria:<\/p>\n Diversification in present portfolio:<\/strong> You should usually diversify from existing fund houses present in your portfolio. So you would like to choose funds from houses which you don’t own or have relatively low exposure.<\/p>\n Asset under management:<\/strong> Usually 500 – 2500 crore is optimum money to be managed.<\/p>\n Fund Manager\/Tenure:<\/strong> Some people like certain fund managers. So you can choose on that and also see how long they have been managing this scheme. All the 5 funds here have fund managers with 3+ years of tenure which seems good enough.<\/p>\n Investment Style:<\/strong> You want to choose funds which invest in large\/medium\/small cap companies or follow value\/growth or blended investment principal. All the 5 funds here are large cap.<\/p>\n You can also look at turnover ratio of portfolio, 1 month – 10 years performance<\/strong> and a lot more things you can think about.<\/p>\n All your funds here are large cap oriented while experts say that mid caps would outperform going forward. Give me atleast 1 mid cap oriented fund?<\/p>\n Ok! If you are firm believer of mid-cap storey I have 2 funds for you in order of my preference.<\/p>\n Both this funds are high return high risk kind of stuff. So know the risk before you invest. Moreover both of these funds don’t offer Online investment facility which I think is very inconvenient.<\/p>\n You said invest in not more than two funds. Give me just two funds you would invest into?<\/p>\n Ok! if you put a gun on my head & say what would you choose? I would go for<\/p>\n So its kind of diversification for me in terms of Investment Style.<\/p>\n As a disclaimer I am already invested in both these funds \ud83d\ude42<\/p>\n Should I invest in lumpsum or spread my investment??<\/span><\/p>\n SIP (Systematic Investment Plan) is the best way of investment in Mutual Funds. But if you have not started tax saving investment for 2009-10 until now you don’t have much option other than going for lump sum. One thing you can do is spread your investment through out January – March 2010 on a weekly basis. But for this you will have to do it yourself as no fund house has weekly SIP.<\/p>\n But for next finacial year be sure to start your SIP right in April 2010<\/p>\n I just a recent post adding two more ELSS worth considering for investments. They are<\/p>\n It’s the time of the year when companies start asking employees to submit their proofs for investments for tax saving. And all of a sudden you realize you haven’t actually even thought about it. What follow is chaos & wrong investments. The storey is almost at this stage for one of my colleagues. We need […]<\/p>\n","protected":false},"author":1,"featured_media":4545,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_uag_custom_page_level_css":"","site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"footnotes":""},"categories":[64,4,63],"tags":[401,453,468,463,455,454,615,616,636,637,14,471,472,456,464,617,465,526,638,618,473,457,65,36,632,527],"uagb_featured_image_src":{"full":["https:\/\/www.apnaplan.com\/wp-content\/uploads\/2010\/01\/Best-Tax-Saving-Mutual-Fund-ELSS.png",1177,643,false],"thumbnail":["https:\/\/www.apnaplan.com\/wp-content\/uploads\/2010\/01\/Best-Tax-Saving-Mutual-Fund-ELSS-150x150.png",150,150,true],"medium":["https:\/\/www.apnaplan.com\/wp-content\/uploads\/2010\/01\/Best-Tax-Saving-Mutual-Fund-ELSS-300x163.png",300,163,true],"medium_large":["https:\/\/www.apnaplan.com\/wp-content\/uploads\/2010\/01\/Best-Tax-Saving-Mutual-Fund-ELSS.png",768,420,false],"large":["https:\/\/www.apnaplan.com\/wp-content\/uploads\/2010\/01\/Best-Tax-Saving-Mutual-Fund-ELSS-1024x559.png",1024,559,true],"1536x1536":["https:\/\/www.apnaplan.com\/wp-content\/uploads\/2010\/01\/Best-Tax-Saving-Mutual-Fund-ELSS.png",1177,643,false],"2048x2048":["https:\/\/www.apnaplan.com\/wp-content\/uploads\/2010\/01\/Best-Tax-Saving-Mutual-Fund-ELSS.png",1177,643,false],"yarpp-thumbnail":["https:\/\/www.apnaplan.com\/wp-content\/uploads\/2010\/01\/Best-Tax-Saving-Mutual-Fund-ELSS.png",120,66,false]},"uagb_author_info":{"display_name":"Amit","author_link":"https:\/\/www.apnaplan.com\/author\/admin\/"},"uagb_comment_info":0,"uagb_excerpt":"It’s the time of the year when companies start asking employees to submit their proofs for investments for tax saving. And all of a sudden you realize you haven’t actually even thought about it. What follow is chaos & wrong investments. The storey is almost at this stage for one of my colleagues. We need…","_links":{"self":[{"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/posts\/188"}],"collection":[{"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/comments?post=188"}],"version-history":[{"count":0,"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/posts\/188\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/media\/4545"}],"wp:attachment":[{"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/media?parent=188"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/categories?post=188"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/tags?post=188"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
\n
\n
Questions Answer Session:<\/h2>\n
\n
\n
Update:<\/h2>\n
\n