What is  Mutual Fund ?

Mutual funds offer you an easier way to invest in the market without any need to directly monitor or manage the investments on a regular basis. Basically, it is nothing but a pool of funds contributed by a number of investors with an Asset Management Company (AMC) which assigns a fund manager to invest it in stocks, bonds or money market instruments for commensurate returns.

Benefits of Investing In Mutual Funds

1. Instant diversification: A mutual fund will provide you with a "basket of stocks" that will provide diversification in your portfolio.
2. Effective for smaller accounts: Since a mutual fund provides exposure to hundreds or thousands of stocks, you do not need to go out and buy hundreds or thousands of stocks on your own, which could be very prohibitive for you if you have a smaller-sized investment account and limited capital to invest with.
3. Professional money management: Mutual funds are run by investment managers who would likely be considered "experts" in their field. Mutual fund companies have resources that are above and beyond what one may have as an individual, retail investor.

Other Benefits by Investing In ELSS Mutual fund Schemes:

Income tax benefit - Investments made in ELSS Mutual Funds are eligible for deduction from taxable income under Section 80C of the Income Tax Act.

Lower lock-in period - In comparison to traditional investment avenues like PPF, NSC under section 80C of the Income tax Act, ELSS funds have the shortest lock in period of 3 years.

Tax-free dividends/Capital gains - Dividends declared under the Mutual Funds scheme during the investment period are tax-free. The profits on the sale of ELSS units are treated as long-term capital gains, and are not subject to tax.

Higher return potential - ELSS funds invest a large part of the fund in equity, which despite short-term volatility has the potential to build wealth