POSTED BY December 15, 2010 10:38 pm COMMENTS (3)
ONHi Manish,
It’s time of year, when everybody starts looking for tax saving measures.
I want to invest in mutual funds. I did slight check. Here’s what I found.
My focus is on investing in mid-cap fund for a period of 10yr+
Non-tax saving top10 midcapFund 1yr 3yr 5yr Return as per valueresearchonline.com
Bitmap
|
32.7 |
9.64 |
28.3 |
|
|
18.6 |
2.94 |
23 |
|
Reliance Growth |
18.8 |
2.27 |
21.7 |
|
Birla Sun Life Mid Cap Plan A |
17.1 |
2.32 |
20.4 |
|
|
27.2 |
11.5 |
19.5 |
|
Sundaram S.M.I.L.E. Reg |
8.93 |
1.13 |
19.2 |
|
ING Dividend Yield |
28.9 |
10.1 |
18.7 |
|
Birla Sun Life Dividend Yield Plus |
28.4 |
12.1 |
18.6 |
|
|
31 |
5.54 |
18 |
|
Sahara Mid-Cap Fund |
26.7 |
2.99 |
17.4 |
|
Average return of top10 funds |
23.8 |
6.05 |
20.5 |
ELSS fund 1yr 3yr 5yr Return
|
24.47 |
7.99 |
22.5 |
|
|
20.95 |
5.24 |
18.9 |
|
Sundaram Taxsaver |
11.65 |
0.34 |
18.4 |
|
HDFC Taxsaver |
26.66 |
6.44 |
17.6 |
|
|
23.76 |
3.84 |
17.4 |
|
Principal Personal Tax Saver |
16.88 |
-4.8 |
16.5 |
|
Birla Sun Life Tax Relief 96 |
12.63 |
-4.77 |
16.4 |
|
Magnum Taxgain |
12.7 |
-2.06 |
16.2 |
|
|
15.89 |
-0.95 |
15.7 |
|
Reliance Tax Saver |
24.78 |
2.29 |
15.3 |
|
Average return of top10 funds |
19.037 |
1.356 |
17.5 |
Now, say if I’d have invested 1lac in ELSS and 1lac in mid-cap fund five yrs back.
Then Now Formula used…A=P (1+r/100) ^n
Equity 100000 -@20.4 average |
253007 |
ELSS 100000 -@17.5 average |
223970 |
Difference both of there return is of 30K. Now, my question, is it better to invest in ELSS and save 20K than to put money in pure equity fund…for first 1lac of investment which helps in saving tax?
Regards
Yogesh Tiwari
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For the next two years,
I will myself as much as possible put my money in ELSS (to make upto the limit of 1 lakh). Even if there is a 5% difference in the performance of a midcap fund and a ELSS, based upon past data!
Money saved is money earned!!
Ramesh
Leave all calculations and understand the reason for ELSS and other equity diversified mutual funds.
One should invest in ELSS when it’s the need of tax-savings. The reason is 3 years lock-in period. If the fund is not performing, you can NOT shift to other schemes. On the other hand, you can shift from one equity diversified scheme to other.
Difference of 2-3% here and there in different time frame is ok.
Also, all these rules are valid before DTC. Till now, Govt. has no plan to continue Sec80C benefit with ELSS.
Hope it will help you.
InvestmentKit.com
Hi MoneySavingsHelp,
My investment horizon is of 10yrs…hence, a few qtrs non-performance wont bother me. My primary basis for performance, is whatever fund I invest in should be able to outperform average of top 10 funds in that category, so to affirm my selection and continuation.
I did further calculations, that is, upon investment of 1lac in ELSS, I still have 20K left with me(amount that I save from tax, kind of free money), that I can again put into non-ELSS MF, whereby making up for the lesser return that I make investing in ELSS MF.
I ‘d appreciate if manish or others can second my thought.
Regards
Yogesh Tiwari