HDFC TaxSaver: Ideal choice for tax-saving and wealth creation

Jaipur 6^th March2019: When it comes to tax-saving options, there is plenty to choose from: Public Provident Funds (PPF), insurance policies, National Savings Certificate (NSC), Equity Linked Savings Scheme (ELSS), etc. But when it comes to providing the benefit of both tax saving and wealth creation, one of the options scores above the rest: the ELSS.

For starters, an ELSS is a mutual fund investment that qualifies for a deduction from the gross total income of individuals/HUFs up to Rs. 1,50,000 under section 80C of the Income Tax Act, 1961. It invests a minimum of 80% of its assets in equity and equity related instruments, thereby offering a higher return potential over a medium to long term than any other tax-saving option.

ELSS comes with a 3 year lock-in period, which is the least among all tax-saving options. The lock-in prevents investors from getting swayed from the ups and downs of the markets, and helps them tide over the volatility which inherently comes with equities.

An investment in HDFC TaxSaver, an ELSS from HDFC Mutual Fund, made with a medium-long term investment horizon, has successfully rewarded investors since the inception of the Fund. It has grown 125 times since its inception 22 years ago and has given a returns of ~23.6% against 13.8% returns given by NIFTY 500 Index on a compounded annual growth rate basis and an investment of Rs. 10,000 at the time of inception of the Fund would have grown to ~Rs. 12.59 lakhs against Rs. 1.90 lakhs in NIFTY 500 Index^.

A monthly SIP investment of Rs. 10,000 since inception of the Fund, aggregating to Rs. 27.3 lakhs, would have gown to ~Rs. 6.3 crores, providing a return of ~22.9%^. The Fund has consistently managed to declare dividends – 22 times in the last 20 years, providing an average yield of 10.6% over the last 8 years.

The Fund has a track record of over 2 decades, and in its journey has successfully navigated the bubbles/excesses of the markets. The Fund has always remained diversified across key sectors of economy, managing its active positions in a controlled manner and thereby reducing risk. HDFC TaxSaver is an ideal investment option that provides the winning tax-saving-cum-wealth-creation combination to its investors, and can play a large part in achieving their long term objectives.