I am a professional and I need to invest in PPF and ELSS for tax benefits. How should I divide the amount between the two? In ELSS, is it advisable to go for two funds instead of one?
-Dr Udare
Equity tends to be the best performing asset class over a long period of time. And therefore, Equity Linked Saving Schemes (ELSS) are far superior to PPF for wealth creation. Equity tends to be risky in the short-term but for an investment horizon of five years or more, it is extremely rewarding. The charm of PPF lies in its guaranteed returns. However, its returns look disappointing in relation to inflation.
You can invest in two tax saving funds to achieve diversification across fund managers, which is desirable for a category like ELSS where the investments are locked in for three years.
This article was originally published on June 08, 2017.
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