6 Mistakes to avoid while investing in ELSS

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6 Mistakes to avoid while investing in ELSS

• By Investmentz

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• The primary objective of ELSS investment is
  long-term capital growth and tax saving. Superior
  long-term growth is facilitated by the power of
  compounding. The scheme under ELSS category also
  gives you high inflation-beating returns they
  also provide you EEE (exempt-exempt-exempt)
  benefit.

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• Here are a few mistakes to avoid while investing
  in ELSS
• Avoid short term investments
• Understand your risk taking capacity
• Avoid investing in ELSS in a lump sum amount
• Redeeming soon after the lock-in period ends
• Investing in too many funds
• Choosing the dividend option

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Avoid short term investments

• Have the patience to ride through the rough and
  tumble of the stock markets if you want your
  portfolio to grow by staying invested for a
  longer period of time and reaping the benefits of
  the same.

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Understand your risk taking capacity

• Take help from your financial advisor to know all
  holdings mentioned in your scheme and then choose
  the fund accordingly as all ELSS vary in their
  risk and return policies

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Avoid investing in ELSS in a lump sum amount

• Avoid investing in ELSS in a lump sum amount

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Redeeming soon after the lock-in period ends

• One major mistake investors make is redeeming
  soon after the lock in period ends. However, the
  longer you remain invested, the more you gain
  from the compounding effect and rupee cost
  averaging principle

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Investing in too many funds

• ELSS funds have a lock-in of 3 years if you are
  investing in too many funds of the same category
  then it may become difficult for you to review
  your portfolio since you cannot exit before 3
  years

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Choosing the dividend option

• ELSS funds have two plan options Growth and
  Dividend. The growth option is the recommended
  plan for long-term wealth creation. If you choose
  dividend reinvestment option then each dividend
  is locked in for 3 years from the dividend
  declaration date

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