Which is the smarter choice – pay tax and invest in mid-cap or small-cap funds which give higher returns, or invest in an ELSS which helps to save tax, but has a low return?

An ELSS fund not only saves you tax but it can also build wealth over the long run. It is not true that an ELSS fund gives a low return.

You might be comparing the recent or last 3 year performance of some midcap and small cap funds. This is not a fair comparison. Looks at the long term returns of various fund classes and you will see that ELSS over long run has also done well.

Small cap and mid cap funds get growth with a higher risk and based on your risk profile may find a place in your asset allocation.

Summary: If you need the tax saving benefit go for ELSS. No point losing upto 30% of your money to taxes and invest in a small cap fund which may suddenly crash unpredictably.

More:

  1. ELSS Funds
  2. Small & Mid cap Funds

Maxiom Wealth — Free Tool

Maximise Your ₹1.5 Lakh 80C Tax Saving

ELSS is the only 80C option that also builds long-term wealth — with the shortest lock-in (3 years) and equity-level returns. See your tax saving and projected corpus with our ELSS calculator.

Calculate ELSS Returns → Talk to a Financial Advisor

Leave a Reply

Your email address will not be published. Required fields are marked *