ELSS Schemes via SIP Investment

Many investors invest in tax-planning funds towards the end of the financial year by making a lumpsum investment. This financial year, distributors are asking such investors to spread their tax-saving investments across the year by opting for systematic investment plans (SIP) in ELSS. 

Can one do a SIP in an ELSS? 

ELSS is a type of diversified equity mutual fund which is qualified for tax exemption. Investors can do a SIP in such funds. The SIP is a specific amount, invested for a continuous period at regular intervals, generally on a monthly basis. It allows the investor to buy units of the scheme at a pre-decided frequency. One can participate in the stock market without trying to time it. It also brings discipline to your investments. Investors can optfor the growth plan or the dividend plan. 

When will the ELSS SIP start?

Investors can fill out a form along with the SIP mandate and register it. Then, submit it to the fund house. It takes 21-30 days for the bank to register your mandate. 

What tenure should the SIP be for?

The SIP should be for tenure of at least a year. If you began later in the year, then you could make up for the missed installments by paying a lumpsum. Fund houses stipulate a minimum time frame of six months for the SIP. Investors can do an SIP for any time period namely one year, three years or even opt for the perpetual option. 

What is the advantage of SIP in an ELSS fund? 

SIP or staggered investments in an ELSS fund avoids last-minute rush and helps spread their investments through the year. Investments up to 1,50,000 per financial year can be claimed as deductions.