Disadvantages of investing in ELSS
- Lock-in period: ELSS carry a lock in period of 3 years, making the investment less liquid as compared to other mutual funds.
- Market Risk: It is the risk of loss arising due to changes in market prices of shares. This can even lead to the loss of capital if prices fall too much.
- Lack of Control: The funds are managed by fund managers. Hence, individual investors do not have any control over the securities in which their money is being invested.
- Limited total benefit: Even if the investor invests a huge amount in ELSS, he would still get deduction of only Rs. 150000 from his total income under Section 80C.
- Limited Tax Benefits: If deductions from other schemes like PPF already amount to Rs. 150000, then deduction under ELSS would not be available to the investor.