Should you invest in ELSS funds? Only if you have high risk appetite

As we approach the last quarter of the financial year, those who did not invest systematically in tax-saving instruments since the beginning of the year will start thinking of doing so. One instrument they should consider is equity-linked saving schemes (ELSS) or tax-saver funds. These funds have, on an average, run up 9.57 per cent over the past three months. Since they are equity-oriented funds, they have a good long-term track record, with a category average return of 11.96 per cent over the past 10 years. But investors should only opt for them if they have high risk appetite and a sufficiently long horizon of 7-10 years. Though they have a lock-in of three years (from date of purchase of each unit), investors need to hold them for longer to earn sound returns.