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Should I redeem ELSS funds after the lock-in period?

Dhirendra Kumar says when should you redeem your investments in a tax-saving fund


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Should I redeem ELSS funds after the lock-in period and invest in other mutual fund schemes for better returns?
-R. Krishnamurthy

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Investing in other funds for better returns won't help. You should redeem your ELSS after lock-in only if you find that the ELSS fund you hold is not doing well. Another reason why people sometimes redeem their ELSS fund is when they are getting close to the end of March and are short of liquidity. You were not able to save enough and if you don't make that investment you will be liable to higher taxation. In that case it might be desirable to redeem and invest that money again to take the tax break. So, you should redeem your investments in an ELSS only in two scenarios. One, the fund is not performing well. Two, you have a cash crunch.

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