Ask ET Mutual Funds: Can I invest in ELSS with an investment horizon of three years

I would like to invest in the following tax saving funds via SIP:

1. TATA India Tax Savings Fund - Direct (G): Rs 2,500

2. Reliance Tax Saver (ELSS) Fund (G): Rs 2,500

3. Birla Sun Life Tax Relief 96 -Direct plan (G): Rs 2,500

4. DSP BlackRock Tax Saver Fund (G): Rs 2,500

I do not have any other major investments to fulfil Section 80C limit and I have a moderately high risk profile with an investment horizon of at least three years. This is the first time I am investing in mutual funds. Please guide me.

--Malaika Monteiro

A few quick observations. One, Equity Linked Savings Schemes or tax saving/planning mutual funds have a mandatory lock-in period of three years. But you should invest in equity mutual fund schemes, including ELSSs, only if you have an investment horizon of at least five to seven years. Two, you have mentioned that you are investing for the first time in mutual funds and you are planning to invest in direct plans of mutual funds. You should invest in direct plans only if have good knowledge about mutual funds and you can take care of your investments on your own. If you don't have a good understanding of mutual funds and are unsure about how to track of funds, you should hire a seasoned mutal fund advisor to help you with your investments.

You have chosen good schemes.


You can also take a look at our ELSS recommendation list.

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