What Is ELSS? And Why It’s the Best Way to Save Tax for Young Investors
ELSS is a tax-saving mutual fund that helps you save under 80C and grow wealth — with just a 3-year lock-in. Here's why it's perfect for young investors.
If you’re earning and paying tax — even a little — you’ve probably heard:
“Invest to save under 80C!”
But with so many options — LIC, PPF, FDs, NPS — it’s confusing to pick one.
That’s where ELSS (Equity Linked Saving Scheme) comes in.
If you’re young and want to grow wealth and save tax — ELSS might be your best bet.
Let’s break it down simply.
💡 What Is ELSS?
ELSS = Equity Linked Saving Scheme
It’s a type of mutual fund that invests mainly in stocks and offers a tax benefit under Section 80C.
- Minimum Lock-in: 3 years (shortest among 80C options)
- Returns: Market-linked (can be higher than FDs/PPF)
- Tax saving: Up to ₹1.5 lakh of investment is deductible under 80C
🧾 Why ELSS is Great for Young Investors
✅ 1. Lowest Lock-in Among 80C Options
| Option | Lock-in Period |
|---|---|
| ELSS | ✅ 3 years |
| PPF | 15 years |
| Tax-saving FD | 5 years |
| NSC | 5 years |
| NPS | Till retirement (partial withdrawal rules) |
💬 If you want flexibility + returns + tax saving — ELSS wins.
✅ 2. Market Growth = Wealth Growth
Since ELSS invests in equity, your returns can grow higher than FDs or PPF.
Average ELSS fund returns over long term:
- 10%–15% (if held for 5–7+ years)
- Can beat inflation & build real wealth
Note: Returns are not guaranteed — but over time, equity generally performs well.
✅ 3. Start Small — As Low as ₹500
You can start an ELSS SIP (Systematic Investment Plan) with just ₹500/month.
- No need to invest lump sum
- Makes it beginner-friendly
✅ 4. Tax Benefits Under Section 80C
Investing in ELSS gives you:
- Tax deduction on up to ₹1.5 lakh
- Savings of up to ₹46,800 (if in 30% slab)
Even in the old tax regime, ELSS is one of the smartest ways to reduce tax.
Tip: Use a SIP to spread investment throughout the year and reduce risk.
🔁 How to Invest in ELSS
- Use platforms like Groww, Zerodha Coin, Paytm Money, Kuvera
- Choose ELSS fund (example: Axis Long Term Equity, Canara Robeco Tax Saver, Quant ELSS, etc.) – It's an example, not a recommendation.
- Decide SIP or lump sum
- Enter PAN, complete KYC, and you’re good to go
✅ No Demat required
🧠 Key Things to Know
- Lock-in is 3 years per investment — each SIP has its own lock-in
- Gains above ₹1 lakh per year are taxed at 10% LTCG (Long-Term Capital Gains)
- Choose Direct Plan + Growth Option for better long-term wealth
- Don’t switch funds too often — stay invested
🔍 Example:
Let’s say you invest ₹1,500/month in ELSS for 3 years:
- Total invested: ₹54,000
- Expected return (12% avg): ₹66,600
- Tax saved (under 80C): up to ₹16,200 (if in 30% tax slab)
You save tax + earn profit + build long-term discipline.
💬 Final Thoughts
If you’re young, working, and want to build wealth without locking your money for 15 years — ELSS is a fantastic choice.
You don’t need to be a market expert.
You just need to start — and stay consistent.
📌 Save tax. Grow wealth. And don’t wait till March 31st every year!
📢 Coming Soon:
Free “ELSS vs Other 80C Options” Comparison PDF – to help choose the best mix.
👉 Subscribe to Bitveen to get it now!
This post is for educational purposes only and should not be considered financial advice.
Bitveen Admin