Savings Investment Tips: While investing and saving, many people as investors focus only on returns. But it is wise to get a tax saving option along with high returns. Now when it comes to tax saving, there are some small savings schemes for fixed income seekers. Among them also 5 year tax saver FD (Fixed Deposit) is the most popular option. Under Section 80C of the Income Tax Act, you can claim tax exemption on investments up to Rs 1.50. Also, if you look at the market linked option, these benefits are also available under 80C in ELSS mutual funds. Fixed Deposits and ELSS i.e. Equity Linked Savings Scheme – these two are completely different – different investment options. The question is which of the two will you get the most benefit from?
ELSS vs Fixed Deposit (FD)
- ELSS stands for Equity Linked Savings Scheme is a type of mutual fund, which invests mainly in equity or equity oriented products.
- So Fixed Deposit (FD) is a traditional investment option, which you can deposit as a lump sum in any bank.
- Returns in ELSS are not fixed and are subject to market risk. However many schemes have given annual returns of 15%-16% in last 5 years.
- The interest rate on fixed deposits is decided by the concerned bank. Currently various banks are offering 6.5% to 8% interest on 5 year FD.
- ELSS has a lock-in period of 3 years. Some schemes have a longer loan in period.
- A tax saver FD has a lock-in of 5 years, although there is an extension facility.
- As ELSS is equity oriented there is market risk.
- FD is a safe investment option and provides returns in the form of fixed interest.
- Talking about withdrawal you can withdraw money from ELSS after 3 years.
- You cannot withdraw money from a tax saving fixed deposit before 5 years. There is a penalty for doing so.
ELSS : Best return fund in 5 years
- Quant Tax Plan: 24%
- SBI Tax Advantage Fund – Series-3 : 23%
- Mire Asset Tax Saver Fund: 16.49%
- Canara Robeco Equity Tax Saver Fund: 16.29%
- Kotak Tax Saver: 15.57%
- ELSS: Best return fund in 10 years
- Quant Tax Plan: 22.89%
- Bank of India Tax Advantage Fund: 17.67%
- DSP Tax Saver Fund: 17.45%
- Tata India Tax Savings Fund: 17.23%
- Axis Long Term Equity Fund: 17%
Where is the highest return on FD?
- Post Office TD: 7.00%
- SBI: 6.50%
- HDFC Bank: 7.00%
- ICICI Bank: 7.00%
- Axis Bank: 7.00
- Kotak Mahindra Bank : 6.20%
- Bank of Baroda : 6.50%
- PNB : 6.50%
- RBL Bank: 7.00%
- IDFC Bank: 7.00% %
