Money does not grow on trees but grows when you invest in suitable instruments. Investing has become essential today, wherein expenses have increased ten-fold, and there’s only a limited salary to manage such expenses. You need a way or two to grow your money to fulfil your dreams, live a comfortable lifestyle and improve your financial stance.
It’s not surprising to find that if your goal is to grow your money faster, equity funds are the best investment option. But a few downsides are equity investments are high-risk, and you need years of experience, knowledge, and skills to decide which would be the best equity instrument to grow your wealth. It might be a challenge for individuals who want to grow their wealth rapidly but do not have the skill set to channel their money into equity instruments.
This is where ELSS comes in. You might as well consider using a mutual fund SIP calculator to anticipate your returns. Here, we will be telling you more about ELSS and the ELSS mutual fund SIP calculator.
What is ELSS?
ELSS, or Equity-Linked Savings Scheme, is an open-ended scheme that invests in equity instruments. It is a mutual fund scheme wherein you can invest in lump-sum or an SIP mode, as your finances and preferences allow. ELSS is an attractive scheme from the point of tax savings. Investment in the same can provide you with a tax deduction of up to INR 1,50,000 as per Section 80C of ITA. It is also worth noting down that even though ELSS primarily invests in equity-oriented funds across industries and market capitalisation, some portion is also invested towards fixed-income securities to diversify market exposure.
One of the significant points of mutual funds is that the fund manager invests your money into instruments according to their expertise and knowledge. They analyse the market conditions, speculate, and invest accordingly to help you get high returns while keeping your investment preferences in mind. This ultimately takes a load off the shoulders of the investor. ELSS, being a type of mutual fund, does the same; your investment is channelled towards the highest-performing equity funds by the fund manager.
How Does a Mutual Fund SIP Calculator Help your ELSS Investment?
A mutual fund SIP calculator helps an investor calculate the returns that can be generated through ELSS over a period of time. It is a user-friendly tool that requires the individual to enter the investment amount, investment frequency, expected rate of return and duration of the investment.
Once these details are entered, an ELSS mutual fund SIP calculator will provide the result on the screen. The amount of return projected on the screen would be the approximate amount you will be getting at the end of your investment journey. However, as an investment in ELSS is market-linked, the actual returns might be different than speculated.
Nevertheless, an ELSS mutual fund SIP calculator can help you formulate your financial plans and align your requirements and investments to help you fulfil your investment and financial goals down the horizon.
Having said that, using an ELSS mutual fund SIP calculator should be your first step; you must use it before you actually begin investing. You can use the tool to determine how much more you will need to invest if you want to achieve your ideal returns faster.
Let’s Understand How a Mutual Fund SIP Calculator Works with the Help of an Example:
Suppose you are planning to invest INR 5,000 a month and expect to earn a return of 10% over a period of 24 months; you can use an ELSS mutual fund SIP calculator to calculate the amount you will receive at the end of 24 months.
Now, you would enter your investment amount as 1,20,000 in the SIP mutual fund calculator. You would also specify the investment tenure and the expected rate of return according to your or your fund manager’s prediction and analysis of the previous ELSS trends in the SIP mutual fund calculator.
Now the amount of maturity that would be displayed on the mutual fund SIP calculator will be INR 1,32,235.
Now you need to know that your actual amount would differ as the investment in ELSS is subjected to market risks, and several factors such as inflation and unforeseen market events also come into play.
The Bottom Line:
An ELSS mutual fund SIP calculator should be your go-to tool if you are planning to invest in ELSS funds. It is easy to use, saves you from complex calculations and provides quick results.
