Having a good retired life is a concern for a majority of the Indians, as retirement planning is often not taken seriously at the right age. While all of us look forward to enjoying the fruit of years of hard work we put in during our lifetime, lack of funds too can be a serious problem in one’s retirement phase. Retirement planning means having adequate funds to meet the future requirements and maintaining the present lifestyle. In order to ensure that you can retire comfortably, you need to plan your retirement well.
Below are some of the reasons to explain that ELSS is one of the best retirement planning investments:
1. ELSS Serves Dual Purpose Of Taxation And Investment
Though tax-planning is an important aspect of financial planning many times we compromise on returns receivable on our investments as we are only looking at the product from a tax deduction perspective.
Most products which qualify for tax deduction under Sec 80C are either traditional plans where the returns, in the long run, are much lower. In the long run, equities as an asset class have outperformed all other investment options hence ELSS have superior growth potential.
As retirement is basically a goal for which the planning starts at least 20 to 25 years prior to the actual age of retirement. Hence, ELSS should definitely be one of the products in your investment basket for retirement planning.
2. Diversification Of Your Retirement Fund
Diversification is an imperative part of financial planning. Funds for retirement should also be well diversified. Usually, retirement planning is done around the fixed and secured investments like government bonds and FDs.
ELSS funds give one the much-needed diversification as they invest in equities and at the same time the risk is not as high as investing directly into stock markets.
Read more: ELSS – A Great Tax Saving Option
3. ELSS ROI (Return on investment) Exceeds Inflation
While making investments, one of the most important aspects to keep in mind is whether your investments are providing positive returns after taking the rate of inflation into consideration. In the long run, the value of ₹ 100 would be much lower than what it is today due to inflation.
Thus, when you are planning for retirement you have to anticipate inflationary trends. If we look at the average return of ELSS in the last 10 years, their performance has been stellar when considering that their ROI has exceeded inflation at every turn.
4. Easy And Flexible Investments
Investments in ELSS are extremely flexible. Apart from this, investments in tax saver mutual funds can be made by investing in a lump sum or through a SIP to take the benefit of rupee-cost averaging. Many investors prefer to take the SIP option to gain from the option of rupee cost averaging.
5. Professional Management Of Funds
ELSS is managed by fund managers who have years of experience and expertise in selling and buying stock based on extensive research. They use the available funds optimally to ensure that the investments give the best possible returns to the investors. Thus, you will reap the benefits of best in class investments without having to track the market daily or do continuous research.
Therefore, ELSS is an investment that gives endless returns when left over a longer period of time which makes it one of the best investment options for retirement planning.