Mutual Fund Investment Plans

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Top 5 Questions of Investors on Reliance Tax Saver Fund

Equity Linked Savings Schemes are among the options that are eligible for tax benefits under Section 80C and as the FY end is coming near investors are waking up to save taxes. MySIPonline has been flooded with various questions at our WhatsApp and Facebook page regarding various queries of the ELSS funds and especially Reliance Tax Saver Fund. The fund has been offered by one of the top fund houses of India, Reliance Mutual Fund, which has been managed by Mr Ashwani Kumar since 2005. So, here we are discussing some major questions that have been asked by our investors till now.

What Is Lock-In Period?
The period in which investors do not get access to their capital in any situation is known as the lock-in period. Reliance Tax Saver is an ELSS plan, and therefore, investors will get the shortest lock-in period in it for the 3 years. Each SIP or lumpsum investment will have the lock-in of 3 years. So, if you started investing in an ELSS fund in April 2015, you can redeem the units bought in the first instalment only in April this year. 
However, the lock-in does not mean that investors need to redeem their capital compulsorily after 3 years. There is no maturity in the fund, so you can redeem it whenever you require after 3 years. 

For How Many Years I Should Invest in Reliance Tax Saver Fund?
As we have discussed above, you cannot redeem your capital before 3 years due to its lock-in period. But you can stay invested later on too in getting the best returns in the long run. We have researched the portfolio of Reliance ELSS Plan, which has invested the assets across the market cap but has made it aggressive. So, investors are suggested to stay invested for at least 7-10 years to get the best returns over the long run. The fund is highly risky, so investors who have a penchant for high-risk should only invest in it.

What Tax Benefits will I Get?
If you invest in Reliance Tax Saver Fund (G), you will get the deduction from income tax under section 80C of the Income Tax Act, 1961. The maximum deduction under section is of Rs 1.50 Lakh while the deduction you can get by investing in the fund is Rs 46,350 approximately (only if you invest up to Rs 1.50 Lakh and your income lies in the highest tax bracket).

How Much Returns I Will Get in 5 Years?
Being an aggressive fund, it is suggested to stay invested in Reliance Tax Saver Growth Fund for 7-10 years as it could not provide you with the maximum returns in 5 years. Still, if you have any financial goal to achieve in 5 years, then the fund can provide the average annualised returns of 12-15 per cent returns. In the past five years, it has given the annualised returns of 17.75% outperforming its benchmark as well as peers. 

How Should I Invest?
SIP is the most preferred way to invest in Reliance Tax Saver Mutual Fund. This is because the average cost of investment will be low when you invest with SIP and you will not have to fear of falling markets. You will buy a few units at higher market and more units in negative markets. In the end, you will get the compounded benefit of investing through SIP mode. 

We hope these answers help you to understand Reliance Tax Saver Fund- Regular Plan. If you have any more issues, you can ask us via call or email or put it here, and we will reach you soon. 

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