Should I invest in ELSS in lieu of equity funds

As per my earlier question I was advised that to achieve corpus of 80 lakhs in next 15 years, I can start SIP of around 25 thousand in any equity MF. This is the link: https://www.advisorkhoj.com/post-your-queries/How-to-achieve-child-education-goal-of-Rs-80-Lakhs. I had certain queries regarding the reply: 1. Will an equity ELSS fund give me almost same returns as any equity growth fund? This is because I need to look at my tax savings also. Hence can I instead go for any ELSS Equity Fund to achieve the same above target and save taxes too? 2. Rather than devoting the entire 25 thousand into any equity MF, will it be advisable to split the amount and invest them in different categories of MF like balanced, diversified, elss, large/small cap, etc. to average out the risks of pure equity? Please suggest?

Apr 26, 2017 by Hitesh, Mumbai | Mutual Fund

Following are the answers to your fresh queries -1. Yes, ELSS can give as much return as of other equity funds. The reason being ELSS funds are basically diversified equity funds. Therefore, if your need is to save taxes as well as wealth creation, investing in ELSS funds makes more sense as you save taxes too!

2. Yes, it is always good to diversify between the fund categories based on your risk profile. However, if you can take high risk then diversified and mid cap funds can give you the best returns over long period.

However, if you are not ready to take high risk, then do diversify part of the investment in balanced funds and keep rest in diversified equity funds. Balanced Funds will bring stability to the portfolio due to the debt component of upto 65% in its portfolio. However, there is not need to invest separately in large cap and mid & small funds as diversified funds invest across all market caps and sectors.

Hope the above answers your queries. Thanks for being in touch :)

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