What are the best tax saving investment options?
One of the key mistakes people make is to plan their tax saving investments in an ad hoc manner, at the end of the year (once they get a reminder from HR!). However, the better approach would be to make your tax planning as part of the Financial Plan. Thereby, you can start a SIP in an ELSS Mutual Fund for a specific long term goal (such as retirement or your kid's education). By doing this you would be saving taxes and meeting your goals at the same time. ELSS Mutual Funds are the best tax saving investment option, due to their relatively short lock in period and their high potential for wealth creation through systematic investing. In a nutshell, ELSS funds are a type of equity oriented mutual fund, with a mandated 3-year lock in. Most ELSS funds maintain diversified portfolios, with an even spread between various market capitalizations. The locked in AUM allows fund managers to take value-based calls in richly valued markets such as these.