The ELSS SIP Route To Intelligent Wealth Building

Posted On Thursday, Dec 30, 2021


Table of Contents
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What Are ELSS SIP Mutual Fund


How does ELSS SIP Calculator Work


What are ELSS SIP Tax Benefits


ELSS SIP Lock In Period

Are you a seasoned investor or just looking forward to start investing in mutual funds?

In any way, we are sure the goal is to build wealth for your long and short term life goals.

And in this quest to build potential wealth, there are many types of Mutual funds schemes that could help you achieve your financial goals.

A major chunk of the market money is invested in ELSS Mutual Funds. After all, ELSS Mutual funds do help you save tax and also have the potential to earn long term risk adjusted returns.

So in this article, we would tell you more about ELSS Mutual Funds.


To put it in simple terms, or to just give you the full form, ELSS SIP means Equity Linked Savings Scheme Systematic Investment plan.

An ELSS SIP Mutual fund or Equity-Linked Savings Scheme Fund is a type of mutual fund that allocates more than 80% of its assets in equity and/or equity linked securities, like listed shares. They do have some exposure to fixed-income securities as well.

An SIP allows an investor to invest in a fund on a regular basis, by setting aside a fixed amount to be deducted from his/her bank account on a set date every month, which is invested in a fund of choice.

So, an ELSS SIP basically means investing in ELSS Funds in a disciplined manner by setting aside a fixed amount every month.

Now the question is, how does one decide on the amount that needs to be invested in ELSS SIP.

This is where an ELSS SIP Calculator comes in picture.

An ELSS SIP calculator is a simulation by the help of which an investor can get an estimate of the value, his/her investment could get over a period of time.

The ELSS SIP calculator will ask you to enter the mode of investment – SIP in this case, the investment amount, frequency of the SIP (Monthly/Yearly), an expected rate of return annually, and the duration for which you plan to continue the SIP’s.

With these inputs, an ELSS SIP calculator gives you the total amount your investment would have accumulated at the end of the investment period. This helps investors to align your investment and requirements together.

So, that was about the ELSS SIP Calculator.

We can now assume you know how to find out how much to invest in an ELSS SIP and what returns to expect, thanks to the ELSS SIP Calculator.

Which means you are now more informed and may want to start investing in an ELSS SIP.

But before that, you must also know about one more aspect of mutual fund investing.

ELSS Lock In Period:

When investing in any mutual fund scheme, it is very important that an investor knows about the Lock in Period.

ELSS Lock In Period is no different.

Lock-in period in mutual funds refers to the period for which an investor cannot redeem the units purchased. It is a predetermined period starting from the date of investment.

So, your money is “Locked In”!

ELSS mutual funds are the of open-ended scheme that has a lock in period of 3 years

But when it comes to the ELSS Lock In Period, there is one big advantage.

Amongst the other tax saving instruments in its category, ELSS Mutual Funds have the smallest lock in period of 3 years.

Which simply means, that you can redeem the units you have purchased just after 3 years. Here is a basic comparison for your understanding:

InstrumentLock-in Period
ELSS Funds3 years
NPS (National Pension Scheme)After you reach 60 years of age
FD (Tax Saving)5 years
NSC (National Savings Certificate)5 years
Public Provident Fund (PPF)15 years

This makes it a bit clear as to why investing in ELSS SIP Mutual Funds makes more sense to some investors.

But that is not the only benefit of ELSS SIP Mutual Funds.

Let’s move on to the biggest advantage of ELSS SIP Mutual funds.

ELSS SIP Tax Benefit:

You see, ELSS Mutual Fund are the only type of mutual fund schemes that come under the ambit of the section 80c of the Income tax act. 1961.

In simple words, if you invest in ELSS SIP Mutual Funds, you avail Rs.1.5 Lakh tax benefit.

This could very well help you in saving upto Rs 46,800 a year for the highest tax bracket.

Which means the ELSS SIP Tax Benefits are something to be kept on the top of the list when planning which funds to invest in.

But one also has to understand that the gains/profits one gets from selling of ELSS fund units is not completely tax free.

The taxation on capital gains is dependent on the holding period. For a short term holding period of less than 1 year, the capital gains are taxable at 15%. The long-term capital gains (LTCG) with a holding period of over a year lesser than Rs 100,000 a year are tax-free

Anything more than this will be subject to a long-term capital gains tax at a rate of 10%, plus all the applicable cess and surcharge.

And for all the Income you may get through IDCW option from your ELSS Sip Mutual Fund investments, are simply added to your overall income and taxed according to the applicable income tax slab.

However, what is worth noting is that despite all these taxations, ELSS SIP Mutual funds are still considered as one of the best tax-saving investment option that is covered under the Section 80C of the Income Tax Act, 1961.

So, today we told you about ELSS SIP Mutual Funds.

We would like to think you now know much more about ELSS SIP Calculator, ELSS SIP lock in period, ELSS SIP mutual funds, ELSS SIP tax benefit etc

So, if you want to start with an ELSS SIP Mutual fund investment, you can start with us right here.

Disclaimer, Statutory Details & Risk Factors:

The views expressed here in this article / video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The article has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of this article should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments.

Mutual fund investments are subject to market risks read all scheme related documents carefully.

Please visit – to read scheme specific risk factors. Investors in the Scheme(s) are not being offered a guaranteed or assured rate of return and there can be no assurance that the schemes objective will be achieved and the NAV of the scheme(s) may go up and down depending upon the factors and forces affecting securities market. Investment in mutual fund units involves investment risk such as trading volumes, settlement risk, liquidity risk, default risk including possible loss of capital. Past performance of the sponsor / AMC / Mutual Fund does not indicate the future performance of the Scheme(s). Statutory Details: Quantum Mutual Fund (the Fund) has been constituted as a Trust under the Indian Trusts Act, 1882. Sponsor: Quantum Advisors Private Limited. (liability of Sponsor limited to Rs. 1,00,000/-) Trustee: Quantum Trustee Company Private Limited. Investment Manager: Quantum Asset Management Company Private Limited. The Sponsor, Trustee and Investment Manager are incorporated under the Companies Act, 1956.

Above article is authored by Quantum.

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