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Diversification Works

Diversify across funds & invest via SIPs to build a long-term wealth portfolio…

I plan to invest Rs 1 lakh in mutual funds. Is ELSS the only option for tax savings? I wish to diversify this money across 3-4 funds; Fidelity Tax Advantage and HDFC Top 200 seem to be good options, what other funds can I invest in?
- Gourav Galhotra

Yes, equity linked savings scheme (ELSS) is the only mutual fund category that offers tax savings under Section 80C with Rs 1 lakh limit every financial year on investments and has a three-year lock-in. It is a good move to diversify beyond the tax saving funds, however, diversification across funds works when planned for and in funds that have different objectives. You could consider by diversifying into a large-cap fund such as DSPBR Top 100 Equity or Franklin India Bluechip or large- and mid-cap fund such as Birla Sun Life Frontline Equity or HDFC Top 200 that you are planning to invest in.

The way to go about investing in mutual funds is by being regular, systematic and discipline. This can be achieved by investing through systematic investment plans (SIP) and not in lump sum. To achieve your long-term investment goals; you should invest in SIPs across the funds that you short list.

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