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| ELSS scores over NSC |
| BS Research / Mumbai Aug 01, 2010, 01:11 IST |
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Please suggest some of the top performing ELSS (equity linked savings schemes). Do you think investing in ELSS is more profitable than National Saving Certificate (NSC)?
-Vivek Singh
You will get the benefit of a tax deduction under Section 80C of the Income Tax Act in both investments, ELSS and NSC.
If you are looking for safety and guaranteed return, NSC scores higher. It offers a fixed annual return of 8 per cent. But, for returns over the long-term, ELSS definitely is better.
ELSS is also a superior investment product in terms of holding period and tax benefit. The mandatory investment period for ELSS is three years, as against six years for NSC. When you sell the units of ELSS after three years, the long-term capital gains tax is zero. But the returns in NSC are added to your tax slab and taxed, accordingly.
Scheme 3-year Return (%)
Canara Robeco Equity Tax Saver 17.7
Fidelity Tax Advantage 13.33
Franklin India Taxshield 10.87
HDFC Taxsaver 11.68
Magnum Taxgain 7.05
Sundaram BNP Paribas Taxsaver 13.66
Category Average 7.38
I have been investing Rs 5,000 per month in DSPBR T.I.G.E.R since 2007. Should I continue this SIP or exit?
-Ram Prasad
If you invested in an infrastructure fund, it is probably because you believed in the theme. This theme has been out of favour, to some extent, when compared to the broad market rally. But if you still believe in the fortunes of this theme and it could very well rebound, continue to stay invested in it.
Amongst the infrastructure funds, DSPBR T.I.G.E.R is not as impressive as some other options in this category which deliver superior returns like ICICI Prudential Infrastructure Fund. But it all depends on what the fund manager delivers. A good fund that offers lower risk is a good bet, but may not give a show-stopping performance. And, over the long haul will prove a consistent player. Are you happy with such an investment style?
Finally, if you have been investing in an SIP since 2007, ensure your units are held on for at least a year, so that you avoid short-term capital gains tax. Say, your last investment was in February 2010, you should sell those units only after February 2011.
I want to start an SIP of Rs 5,000 a month. I have picked HDFC Top 200 and IDFC Premier Equity Plan A. Can you suggest one more? My current investments are in Reliance Vision, SBI Infrastructure Fund Series-I, ICICI Prudential Infrastructure and Sundaram BNP Paribas Select Midcap. Should my third pick be from this selection or should I exit these funds?
-Nimit
We suggest you visit our website, www.valueresearchonline.com. Enter your investments in the My Portfolio tool. You will then see that your investments are probably too tilted towards mid-caps. Below are our suggestions.
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