Investing in mutual funds is popular in India for high returns and diversification. Understanding ELSS and equity mutual funds is vital. ELSS offers tax benefits and a 3-year lock-in, while equity funds allow more flexibility.
The article from MSN Money discusses the differences between Systematic Investment Plans (SIPs) in equity mutual funds and Equity-Linked Savings Schemes (ELSS) mutual funds. SIPs allow investors to invest a fixed amount regularly into mutual funds, which can be either equity, debt, or hybrid funds, offering flexibility in investment choices. On the other hand, ELSS funds are specifically equity-oriented and come with a mandatory lock-in period of three years, which is not a feature of regular equity mutual funds. ELSS funds also offer tax benefits under Section 80C of the Income Tax Act, allowing deductions up to Rs 1.5 lakh annually, which is a significant advantage not available with other equity funds. The article explains that while both types of investments can be made through SIPs, ELSS funds are designed for tax saving with a focus on long-term capital growth, whereas equity mutual funds through SIPs provide broader investment options without tax benefits but with potentially higher liquidity and flexibility.
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