For most Indians, retirement is the most ignored
financial goals. From the beginning of career we start chasing short term goals
which gives us short term gratification like buying a car, buying a New
smartphone, vacation etc. Most of our savings is channelized in achieving our
Retirement Goal.
However, we all have a desire to save tax. We can
channelize this desire to achieve two goals,
- Saving Tax
- Creating Retirement Corpus
Under section 80C, a deduction of Rs 1,50,000 can
be claimed from your total income. In simple terms, you can reduce up to Rs
1,50,000 from your total taxable income through section 80C. This deduction is
allowed to an Individual or a HUF.
To save tax, we normally invest in PPF and other
instruments which has a long lock in period. When you are ready to invest for
such a long period, investing in equity is better idea, as equity is less risky
and more rewarding in long term. You may choose to invest in Equity Linked
Savings Schemes (ELSS) of mutual funds to save tax under section 80 ( C ).
What is ELSS?
An Equity Linked Savings Scheme (ELSS) is an
open-ended Equity Mutual Fund that doesn`t just help you save tax, but also
gives you an opportunity to grow your money. It qualifies for tax exemptions
under section (u/s) 80C of the Indian Income Tax Act.
Along with the tax deductions, an ELSS offers you
the opportunity to grow your money by investing in the equity market. ELSS
carries a lock-in period of 3 years. Furthermore, you can also choose to invest
through a Systematic Investment Plan and bring discipline to your tax planning.
Here`s how it will work. Say, one invests Rs 12,500 monthly in ELSS (Rs 1.5 lakh annually) for 25 years of one`s working life towards retirement. Assuming a growth rate of 12 percent a year, the corpus could be nearly Rs 2.12 crores, which could be part of one`s retirement portfolio in addition to other investments earmarked for retirement.
|
SCHEME NAME
|
1 Year
|
2 Year
|
3 Year
|
5 Year
|
7 Year
|
10 Year
|
12 Year
|
15 Year
|
|
Capital Invested
|
|
Rs 1 Lac
|
Rs 2 Lacs
|
Rs 3 Lacs
|
Rs 5 Lacs
|
Rs 7 Lacs
|
Rs 10 Lacs
|
Rs 12 Lacs
|
Rs 15 Lacs
|
|
Retruns Generated from Various
Schemes
|
|
Maximum ELSS Return
|
? 1,21,559
|
? 2,75,071
|
? 4,41,203
|
? 8,98,110
|
? 16,13,266
|
? 26,14,434
|
? 35,18,416
|
? 82,92,953
|
|
Minimum ELSS Return
|
? 1,00,030
|
? 2,29,534
|
? 3,50,048
|
? 7,25,657
|
? 12,12,686
|
? 19,86,361
|
? 25,83,101
|
? 48,77,739
|
|
Average ELSS Return
|
? 1,10,884
|
? 2,51,585
|
? 3,89,498
|
? 8,08,623
|
? 13,58,294
|
? 23,01,979
|
? 30,64,690
|
? 69,33,800
|
|
S & P BSE Sensex
|
? 1,13,410
|
? 2,45,862
|
? 3,72,791
|
? 6,97,401
|
? 11,06,090
|
? 17,71,240
|
? 23,53,781
|
? 47,32,426
|
|
PPF Calculated @ Actual Rates
|
? 1,07,829
|
? 2,24,307
|
? 3,50,839
|
? 6,37,886
|
? 9,76,743
|
? 15,94,563
|
? 20,93,314
|
? 30,01,347
|
Past Performance may or may not sustain in
future.The above table shows the value of Rs. 1 Lac invested in PPF, Sensex and
various ELSS Schemes as on 31?? May of every year. (Valuation Date :
31?? May 2018) Note: Amount assumed Rs. 1 Lac in PPF
& ELSS. However, deduction u/s 80C has been increased from Rs. 1 Lac to Rs.
1.5 Lacs w.e.f 22n? August 2014.
Disclaimer: The information contained in this
report has been obtained from various sources. While utmost care has been taken
for the preparation of this report, we do not guarantee its validity or
completeness. Neither any information nor any opinions expressed constitute an
offer, or an invitation to make an offer to buy or sell any fund. Investors
should take financial advice with respect to the suitability of investing their
monies in any fund discussed in this report. Mutual fund investment are subject
to market risk. Please read Scheme Information Document and Statement of
Additional Information carefully before investing.
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