Should I invest in a bank’s tax-saving deposit or an ELSS?
— Sai Kiran
Invest in a bank tax-saving deposit if you're a completely risk-averse investor who can't take even an interim decline in value and if you will be fine with modest returns. Such a deposit would come with a 5-year lock-in, and you wouldn’t be able to even borrow against it. Compared to that, an ELSS fund will have a lock-in of only 3 years. ELSS funds also have the ability to generate higher returns. Over the past 20 years, most ELSS investors have made 1.5 times more than the prevailing fixed income returns delivered by debt-oriented tax-saving avenues.