Should I sell my ELSS investments?

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Currently, I am investing in three mutual funds via SIPs.

Mirae Asset Emerging Bluechip Fund: Rs 2,000

SBI Small Cap Fund: Rs 3,000)

SBI Magnum Multicap Fund: Rs 2000

I had also invested in two ELSS funds: L&T Tax Advantage Fund (Rs 10,000) and ABSL Tax Relief 96 Fund (Rs 20,000). The lock-in period for both these funds will be over in September 20 and December 20 respectively. Since both these ELSS funds are not giving attractive returns, should I withdraw the money or keep it for long term? I will be taking a home loan of Rs 30 lakh with a tenure of 20 years in near future. Suggest me a SIP investment which will help me to cover interest on my home loan, considering highest possible return.
-Aparna Hule

You have not shared your goals, investment horizon, risk profile, etc. So, it is not possible to comment on your choice of schemes or suggest suitable schemes for you. You are investing in a large & mid cap scheme and small cap scheme, apart from a multi cap scheme. The first two schemes are meant for aggressive investors with a very high risk appetite, while the multi cap scheme is meant for moderate risk-takers.

Equity mutual funds have been offering poor returns in the last few years. However, three years is to short a period to assess the performance of equity schemes, including ELSS funds. However, since you are thinking of taking a long soon, you can assess your financial situation and take a call accordingly. If liquidating this investment along with some others can bring down your total loan amount, you may sell your ELSS investments after the lock-in period is over. Otherwise, you may hold on to them for better returns.
  • 9.95%Annualized Return for 3 year
  • >3 years Suggested Investment Horizon
  • 2.10 YearsTime taken to double money
  • 7.37%Annualized Return for 3 year
  • >3 years Suggested Investment Horizon
  • 3.10 YearsTime taken to double money

It is an Indian obsession to take a home loan with a longer tenure and channelize entire savings/investment to repay it earlier. Do not fall into the trap. If you are not comfortable with a loan EMI on your head for a long period, opt for short tenure loan. There is not point paying interest for a long period, when you intend to repay it much earlier.

You can consult a financial planner, who would be better placed to help you a personalised advice after taking into account your entire financial details.

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