Want to save tax and grow wealth together? ELSS does both.
But how much will you actually get? Will it meet your goals? A SIP return calculator gives you answers before you invest. A SIP return calculator is an online tool which helps you calculate your returns on your SIP investments.
Let’s understand what ELSS is, how returns work, and how to plan smartly using calculators.
What is ELSS Simply Explained
ELSS means Equity Linked Savings Scheme. It’s a mutual fund that invests your money in the stock market.
Two big benefits:
Saves tax under Section 80C up to 1.5 lakhs. Money grows through equity investment over time.
The catch:
Your money stays locked for 3 years. Can’t withdraw before that. After 3 years, it’s free to take out anytime.
Why people like it:
Shortest lock-in among all 80C options. PPF locks for 15 years. Tax-saving FD for 5 years. ELSS has just 3 years.
Plus, equity gives better returns than fixed deposits or PPF over the long term.
How ELSS Works
Now that we know “What is ELSS?”, let’s see how it works. You invest money in an ELSS fund. A fund manager buys shares of different companies with your money.
When these companies grow, your investment grows. When the market falls, your value drops temporarily.
Two ways to invest:
Lump sum: Put the entire amount at once. Say 1.5 lakhs in one shot. SIP: Invest a small amount monthly. Like 5,000 or 10,000 every month.
Most people prefer SIP. Easier on the pocket. Spreads risk across months.
What is SIP in ELSS
SIP stands for Systematic Investment Plan. Fancy name for regular monthly investing.
How it works:
Decide on a monthly amount – say 10,000. Set auto-debit from a bank account. Money is automatically invested every month. You don’t need to remember or do anything.
Why SIP works better:
Don’t need a large amount at once. Buy when the market is high. Buy when the market is low. Averages out your cost. Rupee cost averaging is called.
Example:
Month 1: Market high, 10,000 buys fewer units. Month 6: Market crashed, same 10,000 buys more units. Over a year: You get the average price across all months.
Better than trying to time the market perfectly.
Understanding ELSS Returns
Returns in ELSS depend on stock market performance. Not fixed like FD.
Historical returns:
Good ELSS funds gave 12-15% yearly over 10-15 years. Some years, 25-30%. Some years have negative returns.
Short-term unpredictable. Long term, equity delivers.
Tax on returns:
Gains up to 1.25 lakhs per year: Tax-free. Gains above 1.25 lakhs: 12.5% tax. Still better than FD, where the entire interest is taxed.
Why You Need the SIP Return Calculator
Guessing returns doesn’t help planning. The calculator shows realistic projections.
What calculator tells you:
How much corpus will you build? Whether it meets your financial goal. Impact of different monthly amounts. Effect of different time periods.
All this before you actually invest a single rupee.
How to Use the SIP Return Calculator
Step 1: Find a good calculator
Search “SIP return calculator” or “ELSS calculator” online. Many financial websites offer free tools.
Step 2: Enter the monthly amount
How much can you invest every month? 3,000? 5,000? 10,000? Put that number.
Step 3: Choose a time period
How many years will you invest? Minimum 3 years due to lock-in. Better to plan 5-10 years for good results.
Step 4: Expected returns
This is important. Don’t dream. Use a realistic 12% for ELSS. The market doesn’t give 20-25% every year consistently.
Step 5: See results
Calculator shows:
- Total amount you’ll invest
- Expected value at end
- Your gains in rupees
Comparing ELSS with Other 80C Options
Use SIP return calculator to compare the returns of ELSS versus other tax-saving options.
ELSS vs PPF:
Both save tax. But returns differ.
PPF: 7.1% guaranteed, 15-year lock-in ELSS: 12% expected, 3-year lock-in
1.5 lakhs yearly for 10 years:
PPF gives: Around 21 lakhs. ELSS gives: Around 29 lakhs (at 12%) ELSS wins on returns. PPF wins on safety.
ELSS vs Tax-saving FD:
FD: 6.5% returns, 5-year lock-in, interest fully taxable ELSS: 12% expected, 3-year lock-in, gains mostly tax-free
1.5 lakhs yearly for 5 years:
Tax-saving FD: Around 8.7 lakhs ELSS: Around 11.5 lakhs (at 12%) ELSS is clearly better.
ELSS vs Life Insurance Premium:
Insurance gives protection, not returns. ELSS gives returns, not much protection. Different purposes. Can’t really compare. Need both, actually.
Taking Action
You now understand what ELSS is and how the SIP return calculator helps planning. Next step? Actually do it.
Open an account with a mutual fund or investment platform. Choose a good ELSS fund based on its track record. Start SIP with whatever you can afford. Use a calculator every year to track progress. Calculate today using the SIP return calculator. Start your SIP tomorrow. Watch your wealth grow over the years.
