Does switching funds trigger tax?
When switching between mutual funds in a corporate class structure, an investor can switch between funds with no tax cost, which is possible because each fund in the corporate class structure is a class of shares in a single mutual fund corporation.
Is it bad to switch mutual funds?
To diversify, mutual funds invest in different stocks of various companies. However, if you find that your fund has invested heavily in stocks of the same companies with a similar line of business then it’s prudent to switch funds. Also, investing in similar stocks increases the risk element.
Should you invest in ELSS to save tax?
By investing in ELSS, an individual can claim a deduction from his/her gross total income of up to Rs 1.5 lakh under section 80C of the Income-tax Act, 1961. ELSS are equity-oriented mutual fund schemes, therefore, comes with higher risk and volatility as compared to a tax-saving fixed deposit.
What is ELSS (equity linked saving scheme)?
As the name suggests, Equity Linked Saving Scheme or ELSS is a type of mutual fund scheme that primarily invests in the stock market or Equity. Investments of up to 1.5 Lac done in ELSS Mutual Funds are eligible for tax deduction under section 80C of the Income Tax Act.
What are the advantages of ELSS mutual funds?
Here’s a look at the advantages of ELSS Mutual Funds: ELSS has the shortest lock-in period of three years. Tax-saving fixed deposits have a five-year lock-in, while PPF has a 15-year maturity. All in all, ELSS offers more liquidity in the medium term.
Is ELSS good for salaried individuals?
ELSS works very well for Salaried Individuals as apart from the upside of higher returns, they can also avail tax benefits under Section 80C of the Income Tax Act. That said, ELSS is also suitable for those who are open to short term risk and can stay invested for a long time for better returns.