Top mistakes to avoid while investing in ELSS
- Exiting after 3 years: Most investors tend to redeem their units in ELSS just after the expiry of the lock-in period. However, this should be avoided unless the goal is achieved.
- Multiple ELSS funds: This will lead to inclusion of many underperforming funds, plus the hectic task of reviewing every fund’s performance.
- Ignoring SIP: The lock-in begins from the date of investment. If the investor does not opt for SIP, he foregoes the benefit of making the ELSS more liquid, since the lock-in will begin from the date when the first SIP is made.
Forgetting SMART goal: In order to obtain tax benefits, investors often forget their financial plan and risk profile. This should be avoided as ELSS is not only a tax saving instrument, but also an investment opportunity.
