These two plans can be useful if you’re searching for a plan with high returns for a smaller investment. with starting at just Rs. 500, one can invest in both schemes.
ELSS Vs Gold Mutual Fund
Do you want to increase an existing investment or start a new one? You should invest in mutual funds. However, the profit split remains the same, so that as your wealth rises, so does your investment. There aren’t many opportunities available where one can invest for high profits. You can invest in a Gold Mutual Fund or an Equity Linked Savings Scheme (ELSS). Both of these choices are thought to be suitable for long-term investments.
What are the benefit of ELSS investment?
Lock-in period in ELSS Fund
In ELSS, there is a 3-year lock-in period, which implies that you cannot remove your investment prior to that time. This is a wonderful aspect of the plan. In comparison to other schemes, it has a very short lock-in time.
You can Start with only Rs.500
With just Rs. 500, one can begin an ELSS Systematic Investment Plan (SIP). There is no upper limit on investment. In this, investors have two different possibilities. Growth comes first, followed by dividend payments. In the growth option, the funds are continuously deposited into the plan.
How you take advantage of ELSS Fund
Companies may offer incentives when choosing the dividend option. One dividend payment each year is possible in plans with a dividend option. Some schemes have, however, given dividends more than once per year.
Tax exemption under income tax section 80C
A financial year’s worth of investments up to Rs 1.5 lakh are eligible for tax exemption under Section 80C of the Income Tax Act. In addition, the ELSS investment profit and the money received upon redemption (selling the investment unit) are entirely tax-free.
Above 1 Lakh Tax Deduction
Mutual fund investors are not required to pay income tax on long-term capital gains (LTCG) they get up to Rs 1 lakh each year. Hence, up to Rs. 1 lakh, you are exempt from paying any taxes. If the profit surpasses this threshold, tax is due at a rate of 10%.
The Gold ETF includes the Gold Mutual Fund. The ones that invest in gold ETFs are those. Mutual funds for gold do not make direct investments in gold bullion. Open-ended investment vehicles known as Gold Mutual Funds invest in Gold Exchange Traded Funds (Gold ETFs), and their Net Asset Value (NAV) is correlated with the success of the ETFs.
Gold ETF’s starting from Rs.500
With a 500 rupee monthly SIP investment, you can start investing in gold mutual funds. You can invest in this without a demat account. Any mutual fund house will let you invest in it.
20% tax on long term gains
Long-term investing in gold mutual funds is when you hold them for longer than three years. Long-term capital gains are the name of its profits (LTCG). With an indexation advantage, LTCG on gold is taxed at a rate of 20 percent (plus surcharge, if any and cess). The investor must pay tax according to the applicable slab rate on short-term capital gains (STCG), however.
Gold ETFs Exit load
Exit loads, which are typically up to one year long, are possible with gold mutual funds. When you want to collect the returns on your investments before a specific period, mutual fund houses charge an exit load. To stop investors from leaving out, exit loads are assessed. Different mutual funds apply their exit loads at different times. Since exit load only makes up a minor portion of your NAV, it is deducted when you leave.