I am looking to invest around Rs 50,000 in ELSS to save tax for this financial year and I would like you to advice on the three best funds that can perform outstandingly in the next three years.
Sai Kumar, Bangalore
Amongst the investments that qualify for tax deductions under Section 80C, ELSS are the only ones with the shortest lock-in period of three years. The remaining investment options have a minimum 5-year lock-in or more. Mutual fund investments do not guarantee returns, and a fund that has performed well in the past is only an indication on its likely future performance and not a guarantee that it will continue to do well in the future as well.
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Moreover, you need not invest in three different funds to save taxes; after all, the investment mandate for all the funds in this category remains the same. Look for a fund that has been a consistent performer over different market cycles to invest in. You could look at the ELSS funds in the OLM Elite list which includes Franklin India Taxshield, Axis Long-term Equity and DSPBR Tax Saver as options to choose from.
