elss - ideal investment products
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Drashti Investments
ELSS
Ideal Investment Avenues
Agenda
• About ELSS
– Key Differentiation
– Advantages
• ELSS – Comparison
• Why ELSS?
• Why Equities?
• Why India?
• Fund Manager Advantages
• Tax Planning
• Past Performance
• Current NFOs
• Summary
• About Us – Services
About ELSS
• An ELSS (Equity Linked Savings Scheme) is a mutual fund scheme that invests in equity & equity-related securities
• ELSS are also eligible investments under section 80C of Income Tax Act 1961, where the investments up to Rs.1 Lac* is eligible for deduction from your total income. Thus you can easily save up to Rs.33,660/- in taxes by investing in ELSS.
• ELSS have a lock-in period of three years. This allows the investors to benefit from the long term growth potential of equities.
* For Financial Year 2006-07
ELSS – Key Differentiation
ELSS is the only investment product that offers ….
Twin Advantages
• Equity Returns • Tax Benefits
ELSS – A Comparison
Instrument Expected Returns Lock-In Period
National Savings Certificate - NSC 8.16% 6 years
Public Provident Fund - PPF 8.50% Up to 15 years
Mutual Fund ELSS Around 15%-20% 3 years
Investment 1 Lac End Value of Investment in Rs. Lac after - Years
Avenue Returns 3 6 8 10 15 20
NSC 8.16% 1.27 1.60 1.87 2.19 3.24 4.80
PPF 8.50% 1.28 1.63 1.92 2.26 3.40 5.11
ELSS 15.00% 1.52 2.31 3.06 4.05 8.14 16.37
Mutual Fund ELSS returns are the assumed returns dependent on the markets and are not guaranteed or assured
Why ELSS?
• ELSS offer the following advantages over traditional tax saving investments
– Potential for higher returns– No limits on maximum investment amount – Lower Lock-in period
Advantages of being a Mutual Fund scheme– Tax benefits as an Equity scheme …
• Tax free dividends • No Long-term Capital Gains
– Choice of AMCs & Schemes and also Options (growth / dividend / reinvestment)
– Convenience / Flexibility of investing (Lump sum / SIP / Switch / STP)
Why Equities?
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Sensex
Company Deposits Bank
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Inflation
Gold
Equities in the long term are not risky !!!
Equities (represented by Sensex) has outperformed all other asset classes … In past 27 years, BSE Sensex has delivered approx. 20% returns yearly
India – Why Invest in Equities
• 9% GDP growth makes India among the fastest growing economies in the world. India presents a fundamentals led growth story expected to keep the pace high for at least a few decades ..
• Indian companies today are very competitive – have growing cost-effectiveness, a confident management, global outlook & plans, etc. The Profit growth rates are very encouraging & are expected to only continue
• As profits grow (between 15%-20%) the market would also grow at such a rate over long term since the prices always trail the profits.
• The market valuations are now fair and stocks are not overvalued. For a long-term investor, the opportunity to create wealth over time is great.
ELSS – Advantages to Fund Manager
Tax Planning with ELSS
Taxable Income
Tax before Planning
ELSS Optimal Amt.
New Taxable Income
Tax After Planning
Savings
150,000 5,100 50,000 100,000 0 5,100
300,000 40,800 100,000 200,000 15,300 25,500
500,000 102,000 100,000 400,000 71,400 30,600
900,000 224,400 100,000 800,000 193,800 30,600
1,200,000 347,820 100,000 1,100,000 314,160 33,660
You can save taxes up to Rs.33,660/- by investing the optimal amount in ELSS schemes till 31st March for the current F.Y.
Past Performance
ELSS – Average 31.24 36.07 40.68
NSE 50 30.8 26.21 25.99
BSE 30 (Sensex) 36.64 30.82 29.04
Mutual fund Investments are subjected to market risks. Please read the offer document carefully before investing. Past performance may or may not be repeated in future.
As on 9th March 2007
ELSS Name 2 Years 3 Years 5 YearsSBI Magnum Tax Gain Fund 46.56 59.04 53.85HDFC Taxsaver - Gr 36.5 45.81 45.49Principal Tax Savings Fund 35.76 37.99 39.83ING Vysya Tax Savings Fund - Gr 35.66 NA NABirla Sun Life Capital Tax Relief -96 Fund 35.29 26.43 34.42Birla Equity Plan - Div 33.38 35.01 45.15Sundaram BNP Paribas Tax Saver - Div 32.96 44.1 40.55HDFC Long Term Advantage Fund - Gr 31.03 38.1 48.43Franklin India Taxshield Gr 28.53 29.69 34.95Prudential ICICI Tax Plan-Gr 28.27 44.38 43.14
ELSS: NFOs
Long Term Advantage Fund
December 21, 06 - March 20, 07
10 year close ended Equity Linked Saving Scheme (3 year lock in)
80-100% Equity and equity related instruments
0-20% Debt, Money market instruments & Securitized debt
JM Equity Tax Saver-Series I
December 28, 06 - March 29, 07
3 year close ended Equity Linked Saving Scheme
80-100% Equity and equity related instruments
0-20% Debt, Money market instruments & Securitized debt
Summary
• India is among the most attractive investment options. Don’t miss the bus !!!
• Treat long-term wealth creation as a primary objective. Treat tax savings as additional / bonus.
• Invest before 31st March !!!!
About Us
• Drashti Investments is a financial supermarket which offers you more than 600 mutual fund schemes, Unit Linked Insurance Plan (ULIP),life Insurance, Initial Public Issues, RBI Bonds, New Fund Offers of Mutual Funds and other tax-saving and investment instruments.
• We will also assist you in Tax Planning and Financial Planning.
• We are a part of NJ Fundz Network, India’s leading advisors & distributors of mutual funds. NJ is a premium network of Financial Advisors.
• As a client of ours, you would have access to one of the best online investment accounts that are updated on a daily basis and would give you consolidated valuations & other reports for All Mutual Funds – All Schemes
About Us - Services
Services Investment Advisory Plan for
Financial Planning Wealth Creation Child Education
Investment Advisory Regular Income Child Marriage
Portfolio Management Capital Protection Retirement
Financial Product Distribution Any Mix of Above Comprehensive Planning
Happy Investing
Drashti Investments
E-mail : drashti.investments @rediffmail.com