I want to invest Rs 20,000 in mutual funds which can yield moderate returns and give tax benefits. But I don’t know much about mutual funds, should I regularly invest in funds or make a one time investment? Please suggest a fund to invest.
- Raja Nandan
A systematic investment plan is the most convenient and efficient way to invest in a mutual fund. With this facility, one invests fixed amounts at pre-determined periods in a mutual fund scheme. You should consider using this strategy to invest in funds, however small the SIP value. As for tax benefits on mutual fund investments, you should consider investing in equity linked savings scheme (ELSS). These are tax planning funds with a three-year lock-in, with investments in these qualifying for tax deduction under Section 80C. You can consider investing in funds such as Fidelity Tax Advantage, HDFC Taxsaver and Taurus Tax Shield, all three are tax planning funds and have a good performance track record.
This article was originally published on April 14, 2011.
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