Author – NARENDRA Kr SURANA
Designation โ WEALTH ARCHITECT
FOUNDER SWATIK INVESTMENTS
Systematic Investment Plans (SIPs) have revolutionized the way individuals invest in mutual funds, including tax-saving options like Equity-Linked Savings Schemes (ELSS). SIPs are a popular choice for individuals looking to grow their wealth while benefiting from tax savings and disciplined investing.
Investing through SIPs not only encourages financial discipline but also ensures regular contributions, typically on a monthly basis, by automating investments. This approach guarantees that investors allocate a fixed amount to tax-saving funds without worrying about timing the market.
Another significant advantage of SIPs is rupee cost averaging. Through SIPs, investors buy more units when the market is down and fewer units when itโs up. This averaging helps mitigate market volatility, reducing the impact of price fluctuations and potentially leading to better long-term returns.
ELSS funds have gained significant traction among SIP investors due to their relatively shorter lock-in period compared to other tax-saving options like Public Provident Fund (PPF), National Savings Certificate (NSC), or Tax-Saving Fixed Deposits (FDs). Investors can invest either in lump sum or through SIPs with contributions as small as โน500. Depending on the investor’s needs, returns may come through capital appreciation or Income Distribution Cum Capital Withdrawal (IDCW).
Under Section 80C of the Income Tax Act, ELSS funds qualify for tax deductions of up to โน1.5 lakh annually, making them a preferred choice for SIP investors. By spreading investments across the financial year through SIPs, investors can plan their taxes efficiently without a last-minute rush. A recent example is the Bajaj Finserv AMC Tax Saver Fund, designed to offer dual benefits of tax savings and wealth accumulation over the long term by investing in equities.
ELSS funds primarily invest in equity markets, which have historically delivered higher returns compared to other tax-saving instruments like PPF or FDs. SIPs help maximize the growth potential of these funds while managing risk through systematic contributions. Schemes like Bajaj Finserv AMC’s Tax Saver Fund are suitable for investors seeking long-term wealth creation through equity investments with tax benefits.
With the digital transformation of financial services, investing in SIPs for tax-saving funds has become more convenient than ever. Online platforms and mobile apps enable seamless account setup, monitoring, and management, making SIPs an attractive option for tech-savvy investors. Whether you’re a novice or a seasoned investor, SIPs provide an effective way to achieve financial goals while optimizing tax savings.
