DSP Tax Saver Fund is an open-ended ELSS equity-linked savings scheme, which provides tax benefits under section 80C of the Income Tax Act, 1961. ELSS fund (Equity Linked Savings Scheme) is a mutual fund scheme, where tax deduction from total income is available. Individuals who seek income tax deduction can save up to a lakh every year by investing in this tax-saver fund.
With DSP, the lock-in period is a minimum of three years, but like in any other equity model, it is advisable to stay invested for at least 5 years to reap maximum benefits.
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Understanding ELSS:
ELSS stands for Equity Linked Savings Scheme and it primarily invests in equity and equity related securities of corporates. This scheme offers a deduction in the total income tax paid by the investors.
The returns are much higher than most investment in ELSS.
Portfolio:
A portfolio is a collection of all the financial investments you own, such as stocks, bonds, commodities, cash, and cash equivalents. In this, the cash equivalents include closed-end funds and exchange traded funds (ETFs). A portfolio contains a wide range of assets such as art, real estate, and private investments. It also comprises your details such as student loans and credit card balance. Maintaining a diverse portfolio is key to making great investments.
Portfolio composition :
An ideal asset allocation is the mixture of investments, which range from most aggressive to the safest. The key concept is to have that which returns what you want over the given period of time. The composition of your asset can include stocks, money market securities, cash, or bonds, and how much you invest in each category depends on your available time and risk tolerance.
Each asset class has its own level of return and risk. For this reason, the investors must consider their individual risk tolerance, investment objectives, time bracket, and their money available to invest as the basis for their portfolio composition. All these aspects are important as the investors must look to create an optimal portfolio that serves their needs.
For instance, an investor with a long time bracket and bigger sums to invest might feel comfortable with high-risk, high-return options. On the other hand, investors with shorter time brackets and small sum of money may prefer low-risk, low-return assets.
Frequently asked questions:
a)Does DSP offer tax benefits under 80C?
Yes. DSP offers tax benefits upto Rs. 1.5 Lakh.
b)Will my profits on withdrawal be tax free?
Yes. Long term capital gains exceed Rs 1 lakh in DSP. Any investment that is made on or after April 1, 2018 is taxable at the rate of 10%.
c)What would be my predominant asset class exposure?
Equity would be the predominant asset class. In ELSS, the exposure to equity is at least 80% of the portfolio.
d)Does it offer transparency?
Yes. DSP discloses the portfolio every month; the NAV is also disclosed daily.
