Section 80C of the income tax code allows for certain types of investments to be deducted the income taxes you owe. Finding the right investments to claim on this section of your tax paperwork is not easy without some professional guidance. Using tax saver mutual fund investments is ideal when trying to take advantage of the tax deduction. These types of equity linked savings schemes are very popular with investors. Below are some of the reasons why now may be the time to invest some money into a tax saver mutual fund.
Long-Term Investments Generally Yield Higher Returns
One of the things you probably fail to realize about equity linked tax saver mutual fund investments is that they can yield higher returns over time. Leaving your money in a locked-in ELSS fund is a great way to let your money grow over time. While equity linked investments do have a higher risk than other tax-saving instruments, they can be more lucrative when done the right way. If you are interested in creating a long-term portfolio, then using a tax saver mutual fund is a great start.
Tax-Free Advantages
After the first year of reporting your tax saver mutual fund investments, you will be able to collect gains on them tax-free. Any returns or dividends earned from this type of investment is consider an equity fund, which under the tax code means that you do not have to pay taxes on these gains. If you are confused about how to get started with this type of investing, working with a professional is a must. An investment advisor will be able to offer you the guidance needed to choose the right ELSS funds with ease.
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