6 Mistakes to avoid while investing in ELSS

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Read more to find out about the 6 mistakes to avoid while investing in ELSS

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6 Mistakes to avoid while investing in ELSS:

6 Mistakes to avoid while investing in ELSS By Investmentz

Slide 2:

The primary objective of ELSS investment is long-term capital growth and tax saving. Superior long-term growth is facilitated by the power of compounding. The scheme under ELSS category also gives you high inflation-beating returns they also provide you EEE (exempt-exempt-exempt) benefit.

Slide 3:

Here are a few mistakes to avoid while investing in ELSS: Avoid short term investments Understand your risk taking capacity Avoid investing in ELSS in a lump sum amount Redeeming soon after the lock-in period ends Investing in too many funds Choosing the dividend option

Avoid short term investments:

Avoid short term investments Have the patience to ride through the rough and tumble of the stock markets if you want your portfolio to grow by staying invested for a longer period of time and reaping the benefits of the same.

Understand your risk taking capacity:

Understand your risk taking capacity Take help from your financial advisor to know all holdings mentioned in your scheme and then choose the fund accordingly as all ELSS vary in their risk and return policies

Avoid investing in ELSS in a lump sum amount:

Avoid investing in ELSS in a lump sum amount Avoid investing in ELSS in a lump sum amount

Redeeming soon after the lock-in period ends:

Redeeming soon after the lock-in period ends One major mistake investors make is redeeming soon after the lock in period ends. However, the longer you remain invested, the more you gain from the compounding effect and rupee cost averaging principle

Investing in too many funds:

Investing in too many funds ELSS funds have a lock-in of 3 years; if you are investing in too many funds of the same category then it may become difficult for you to review your portfolio since you cannot exit before 3 years

Choosing the dividend option:

Choosing the dividend option ELSS funds have two plan options: Growth and Dividend. The growth option is the recommended plan for long-term wealth creation. If you choose dividend reinvestment option then each dividend is locked in for 3 years from the dividend declaration date

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