New LTCG Tax

Best SIP Funds to Invest Online 

The proposal to tax long-term capital gains from equity funds has miffed investors. Their returns will now be lower than anticipated. 

This could change the way people prefer to invest their savings. For instance, equity-linked savings schemes (ELSS) could lose the tax-free status that made them among the favoured options for investors looking to save tax. 

Also, given that equity funds will not be allowed indexation benefit, the tax disparity between equity and debt schemes has narrowed, making debt funds and FMPs more attractive now. 

ELSS can still yield higher post-tax returns
Even after 10% tax, ELSS funds retain high wealth generating ability. 

Continue Investing in ELSS

The tax on LTCG will make tax-saving options such as the Public Provident Fund (PPF) and Ulips more tax-efficient than ELSS funds. These will continue to be tax free while the gains from ELSS funds will be taxed at 10%. But experts say investors should not shun ELSS because of the new tax. The different nature of these investing avenues means each has a different role to play in an investor's portfolio. Being pure equity based instruments, ELSS funds have the potential to generate higher returns, making them an ideal long-term investment, irrespective of the new tax. For aggressive investors, ELSS still remains lucrative as the post-tax return will be greater than PPF and high cost Ulips

 

Low cost Ulips, sold online directly by insurance firms, can possibly provide returns comparable with ELSS over the long term. But unlike Ulips, ELSS offer greater flexibility to investors. They don't have to make a multi-year commitment and can shift to another fund if a scheme is underperforming. In case of underperformance in a Ulip, the investor can only switch between funds offered by that Ulip. "ELSS funds have lost some of their sheen but they still remain the best option in the 80C basket for long-term wealth creation 

Avoid Ulips, insurance policies
After the Budget announced the tax on LTCG, insurance companies have started giving ads highlighting the tax-free returns from insurance policies and Ulips. However, financial planners advise against investing in these plans. We prefer to recommend investment products which give taxable returns but perform better than products which are tax free but give low returns. Mutual funds remain our first choice, not tax-free insurance policies

n any case, insurance and investments should not be combined in one product. A term plan serves the objective of protection better and mutual funds generate higher returns. 
If you want to save tax under Sec 80C, a combination of ELSS and PPF is perhaps the best option. While ELSS generate higher returns, PPF provide a stable foundation with assured income. Ideally, investors should have a mix of ELSS and PPF, and not use one instead of the other. This fetches the investor three benefits under one basket—asset allocation afforded by mix of equity and debt, safety of a government backed vehicle and pure growth of an equity offering 

 

 

SIPs are Best Investments when Stock Market is high volatile. Invest in Best Mutual Fund SIPs and get good returns over a period of time. Know Top SIP Funds to Invest Save Tax Get Rich - Best ELSS Funds

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