You know that investing is important for securing your financial future. It helps you earn returns, grow your wealth, and achieve your long-term financial goals. But what if your investment could also help you reduce your tax liability? In today’s world, where inflation and cost of living is increasing rapidly, investing in tax saving investment options has become more important than ever. That’s where ELSS funds can help.

ELSS (Equity Linked Saving Scheme) funds are tax saving mutual funds that invest a major portion of their assets in equity and equity-related instruments. With ELSS schemes, you not only save taxes under Section 80C of the Income Tax Act (old income tax regime) but also get to earn market-linked returns. 

Key features of ELSS funds 

• ELSS funds invest in stocks across market capitalisations

ELSS funds are diversified equity mutual funds that invest across different market capitalizations (large caps, mid caps, small caps). They also invest in companies across various sectors, including healthcare, banking, IT, and pharma, among others. With such diversification, ELSS funds offer investors added stability as their risk is spread out in the portfolio.

• You can choose from growth and dividend options 

ELSS mutual funds offer growth and dividend options. Under the growth option, the returns are reinvested, and you can benefit from the power of compounding. Under the dividend option, the returns are paid out to the investors from time to time.

Note that dividend pay-outs are subject to tax as per your taxable income. Therefore, it is advisable to opt for the growth option if your investment horizon is more than 5 years. 

• Short lock-in period

ELSS funds come with a 3-year lock-in period, which is the shortest when compared to other tax-saving investment options like the Public Provident Fund (PPF) and National Savings Certificate (NSC). The lock-in period provides fund managers enough time to execute their strategies to maximise yourmutual fund returns.

Once the lock-in period is over, you can withdraw or re-allocate investments as per your financial goals without any exit load restriction.

• Minimum investment amount and no upper limit

ELSS funds give you the flexibility to begin investing with small amounts via Systematic Investment Plans (SIP). This allows you to manage your finances better and ensures that you don’t have to strain your budget. And with no upper limit, you can channel more capital into the scheme if you are looking to seek higher returns. 

Understanding the taxation of ELSS funds 

Since ELSS funds have a 3-year lock-in period, the gains are classified as long-term capital gains (LTCG) and taxed at 10% without indexation benefit. Note that the long-term capital gains up to Rs 1 lakh are tax-free.

However, holding ELSS funds for a minimum of five years is highly recommended. The longer you hold your ELSS units, the better chances you have of reaping the benefits of compounding, which can help you create wealth over time. Also, ELSS funds tend to perform well in the long term because of their equity-oriented nature, offering higher growth potential compared to other tax-saving instruments.

So, how can you invest in ELSS funds? 

Investing in ELSS funds is extremely easy with the availability of numerous digital platforms and investment apps. Simply create an account, complete the KYC formalities, and choose the mutual funds to invest in. Most digital platforms also give the option to set up automatic investments through SIPs, which further simplifies the investment process. After investing, you can easily track your ELSS funds online, with regular updates and statements available on the investment portal or app.

When it comes to getting into the world of trading, there is nothing more important than choosing the right broker. Before committing to a specific broker, it is essential you have a thorough understanding of the services they offer, their fee structure, and whether they are regulated. The research you do will help to increase your chances of having a smooth and successful trading experience.This review will offer an overview of EXANTE. If you want more information on the broker, you can read another EXANTE review.

EXANTE’s background

EXANTE is a global investment company that provides direct access to the financial markets through its client-centric trading and investment solutions. Established in 2011, the brokerage firm has over a decade of experience delivering bespoke services to its clients. Currently, the company is regulated in all regions it is based in.

In the UK, EXANTE is authorised and regulated by the Financial Conduct Authority (FCA). In Hong Kong, it is licensed by the Securities and Futures Commission (SFC), while in Cyprus, EXANTE is licensed by the Cyprus Securities and Exchange Commission (CySEC). In Malta, EXANTE is licensed by the Malta Financial Services Authority (MFSA) which allows it to provide financial services to both retail and corporate clients, including for both trading and investment purposes.

The broker is also compliant with the MiFID II framework that regulates all financial market activity within the European Union.

EXANTE’s instruments

EXANTE provides an impressive range of over 600,000 financial instruments on global markets and exchanges. The products that EXANTE offers include stocks and Exchange-Traded Funds (ETFs), currencies, metals, futures, options, and bonds. Below, we take a more comprehensive look at these products.

Stocks and ETFs

EXANTE offers over 24,000 stocks and ETFs in over 50 financial markets around the world. With 100% live prices, traders with EXANTE can invest in blue chips, new IPOs onUS markets and European and global exchanges, allowing them to easily diversify their portfolios. Stock exchanges offered include the American Stock Exchange (AMEX), Australian Securities Exchange (ASX), London Stock Exchange (LSE), New York Stock Exchange (NYSE), Swiss Exchange (SIX), and more. Rates vary, depending on the size of the trade and the type of stock or ETF being traded.

Currencies

EXANTE offers over 50 currency pairs through its state-of-the-art online trading platform. With 100% live prices and a 10ms execution with ultra-low latency, traders can trade forex on the spot or through swaps and forwards. Some currency pairs include major ones such as AUD/USD, GBP/USD, and EUR/USD, as well as minor pairs such as EUR/JPY and more. EXANTE allows traders to trade exotic currencies that are available upon request. Traders can also access leveraged trading, with spreads varying depending on the account type, trade size, and currency pair being traded.

Metals

Traders can take advantage of trading gold, silver, copper, platinum, and palladium. As metals are limited in quantity and can be used in a variety of ways, they are equally valued by industrial players and investors. With EXANTE, individuals can trade precious metals without necessarily needing to own the underlying asset. Providing 100% live prices and 10ms execution, traders can invest in metals on the spot or through derivatives such as futures and options, or ETFs. Rates tend to vary depending on the trade size and the metal being traded.

Futures

Derivative traders will be pleased to know that EXANTE allows for derivative trading. This means traders can trade exactly what they need, hedge risks with the wide range of futures contracts available, as well as enjoy the single-account trading model that EXANTE provides. The brokerage firm provides over 30 global futures markets, with 100% real-time prices and 10ms execution with ultra-low latency. There are over 500 futures varieties ranging from commodities to bonds. Markets available cover the US, Europe, and APAC, with varying rates.

Options

Options provide traders with easy risk management and can be traded on markets from Chicago to Osaka. Traders can find, analyse, and trade options using EXANTE’s convenient online trading platform that features numerous powerful tools. With more than 500,000 options available, EXANTE has an impressive potential for portfolio diversification. Those keen on trading options will find a neat option board and access to the Greeks and Implied Volatility (IV). Exchanges cover the US, Europe, and APAC regions, with popular names such as the Chicago Board Options Exchange (CBOE), the Hong Kong Exchange (HKEX), and the Chicago Mercantile Exchange (CME).

Bonds

Traders can invest in bonds with EXANTE. There is a wide range of bonds available, including exchange-traded and over-the-counter (OTC) bonds, as well as state and private bonds from governments all over the world. These include the US, Europe, and Exotics. Bonds with timely interest payout are available, as well as exotic bonds upon request.

Bottom line

In the complex world of financial markets, choosing a broker that suits your needs is crucial. In our opinion, EXANTE is a reliable and trustworthy broker that is regulated globally in major trading locations. For traders looking to participate in a variety of financial markets, EXANTE is surely a worthy broker for your consideration with over 600,000 financial instruments available for clients regardless of account type.