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Shabbir is a developer in the field of Applications, web as well as database designing and is devoted to the optimization and usability of the code. Apart from doing some Share trading he maintains Programming forum and is a C++ addict.

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Best Tax Saving Funds

August 11th, 2009 • Related • Filed Under

Image Credit : alancleaver

When it comes to Tax Saving and ELSS Funds I prefer to invest in funds where I get maximum dividend and that way I do not need to invest my full amount and also get the Tax benefit of full amount invested. Read how if you still have not read – Full tax saving without investing one lac. Now many people ask me about how to know the dividend history of funds and so for them I have Dividend History of Mutual Funds.

So now using the methods discussed in the above two articles I would list some of the best Tax Saving funds. The list of funds I have selected are based on criteria of consistent dividend for a longer period of time.

Birla Sun Life Tax Relief 96

Best Dividend ever by any Tax saver fund I know off.

Record Date	Rate of Dividend
Jun 27, 2008	50 %
Mar 25, 2008	200 %
Mar 16, 2007	500 %
Jan 19, 2007	260 %
Dec 8, 2006	250 %

Principal Personal TaxSaver

One more best dividend Tax saver fund I know off. Principal Personal TaxSaver has given probably the best dividend in the most difficult time.

Record Date	Rate of Dividend
Mar 25, 2008	400 %
Feb 26, 2008	200 %
Dec 31, 2007	110 %
Oct 30, 2007	110 %
Mar 13, 2006	100 %

SBI Magnum Tax gain

Yet another fund by SBI Mutual Fund house which has very good track record when it comes to return as well as dividend.

Record Date	Rate of Dividend
May 29, 2009	28 %
Feb 15, 2008	110 %
Mar 2, 2007	110 %
Mar 10, 2006	150 %
Jun 10, 2005	102 %

HDFC Tax Saver

Not into one of the best dividend rate like above funds but very consistent when it comes to dividend and also return of this fund is also worth investing.

Record Date	Rate of Dividend
Mar 6, 2009	50 %
Mar 7, 2008	80 %
Mar 8, 2007	75 %
Mar 17, 2006	75 %
Feb 17, 2005	50 %

Canara Robeco Equity Tax Saver

Not as good as above ones, but best when it comes to return of the fund.

Record Date	Rate of Dividend
Mar 28, 2008	30 %
Mar 15, 2007	60 %
Mar 16, 2006	40 %
Mar 18, 2005	25 %
Mar 26, 2004	15 %

Apart from the above old funds I also expect some good returns for some of the new tax saving funds which till date have not recorded good dividend but that is may be because of the current market situation for last one year or so and so they deserve mentioning.

Fidelity Tax Advantage

Record Date	Rate of Dividend
Mar 13, 2008	15 %

DSP Blackrock Tax Saver

Record Date	Rate of Dividend
Feb 29, 2008	36 %

Kotak Tax Saver

Record Date	Rate of Dividend
Feb 8, 2008	35 %
Feb 20, 2007	30 %

What next?

There Are 108 Responses So Far. »

Comment by Dr shrinivas on 11 August 2009:

Sir i\’m planning to start SIP of Rs 5000 each in Birla sun life tax relief 96 and in Principal Personal tax saver funds. Can u please help whether i should go with SIP in these funds or are there any better ELSS funds in market presently.
Comment by Shabbir Bhimani on 11 August 2009:

According to me you have selected the best in the business.
Comment by Mutual Fund on 14 August 2009:

Thanks for the Updates!
Comment by Shabbir Bhimani on 14 August 2009:

The pleasure is all mine
Comment by Sathish on 1 September 2009:

Hi Shabbir,
Its very nice to see your website especially for newbee like me. I am 24yrs and would like to invest money which would help me to save tax & get good returns. I am planning to invest 30,000 in ELSS through SIP. How and what do you suggest? Do I first buy for 20,000 and then 1000/month or…? Also what do you think about Can robeco, Sundaram tax saver & quantum tax saver? What should I see, dividend or return before investing?

Thanks
Comment by Shabbir Bhimani on 1 September 2009:

Sathish,

That was a good question and I have answered it here

Dividend or Return on Tax Saving Funds

Also I think I would prefer SIP because its too volatile for lumpsum kind of investment.
Comment by dr swapnil nagvekar on 17 October 2009:

hi shabbir
iam seen ur website .its great site .i wanted to knw which shares of hdfc should i buy .are hdfc warrent shares fine?which are the best shares t buy in banking section .

tahnks
Comment by Shabbir Bhimani on 17 October 2009:

I am not sure what you meant by which share of HDFC but there are two of them one is HDFC and other is HDFC Bank one is financial body and other is bank respectively. You can buy any but at the current level consult your advisor if you should be buying or not.

Regarding banking sectors there are quite a few of them and one of them I like is Federal Bank but it should be buy at declines.
Comment by Sanjay Singh on 27 October 2009:

Hi Sir,

I believe you have got my reply & understand my concern. Since, i am Pursuing my MBA from (SCDL, PUNE)Finance Management, you better can understand the value of topics which i have asked in the last mail.

It doesn’t matter whether the course has been done on regular basis or from distance learning from any college or institute. Both have equal importance & weightage.

I insist you to please send the content regarding those topics or suggest me any best financila book, covering all the topics.

However, i believe the course material which i have had limited reading material & indepth knowledge of the topics.

Thuogh,i am active investor too & believe in regular investment through my limited savings. I want best guidance from you through this mode.

Pls help me regarding this.

Thanks & Regards,
Sanjay Singh
Comment by Shabbir Bhimani on 27 October 2009:

I would suggest you check out http://shabbir.in/the-warren-buffet-way-book-review/
Comment by K.CHANDRAMOULI on 2 December 2009:

I am 73 yrs old.I require to invest Rs 50,000.00 in Tax Saving ELSS for the current FY.
Kindly advise.
K.Chandramouli.
Comment by Shabbir Bhimani on 2 December 2009:

Choose any from the list. They are the best in the business.
Comment by rajesh on 3 December 2009:

I want to invest Rs 40000/- in tax saving mutual funds.
suggest me which is better option ” Dividend fund” or ” Growth fund”
Also help me to choose MF.
Kindly send me the details to my email id

Regards
Rajesh
Comment by Shabbir Bhimani on 4 December 2009:

I always prefer dividend option as I get quite a chunk of money back and get the benefit of full investment. See http://shabbir.in/full-tax-saving-without-investing-one-lac/

Also I have listed the best option already in this article.
Comment by Brij Kumar Singh on 7 December 2009:

Dear Shabir,
I had to invest about Rs 50,000 in ELSS fund as tax saving exercise.Kindly advice the fund and growth/dividend option.I have in my portfolio SBI Magnum,HDFC taxsaver,HDFC LT, Reliance tax saver, Fidelity tax advantage, Franklin tempelton Birla tax relief 96 and BNP Paribas
Comment by Shabbir Bhimani on 7 December 2009:

I see you have a very good list of funds.
Comment by Ayan Chowdhury on 9 December 2009:

Is there any difference in return if you invest at a time or if you invest every month (SIP)?
Comment by Shabbir Bhimani on 9 December 2009:

Yes. Monthly Sip is best in volatile markets but lumpsum amount is preferred when you have a good solid bull market.
Comment by VIJAI on 13 December 2009:

I HAD INVESTED 10000/- IN UTI-GROWTH SECTOR SERVICES FUND.
SHOULD I CONTINUE OR SWITCH OVER.
Comment by Shabbir Bhimani on 14 December 2009:

If you are making decent profit I would switch to some other Midcap Fund or even to Reliance Growth Fund.
Comment by Shorya on 19 December 2009:

hi..shabbir

i want to invest about Rs 50,000 in ELSS funds. which tax saver funds should i invest in..Should i go with Birla sun life tax relief 96 and Principal Personal tax saver funds or any other fund you can suggest..
Comment by Shabbir Bhimani on 19 December 2009:

Either would not be a bad option
Comment by Sumit Bhatia on 21 December 2009:

I have invested 15000 in reliance infra fund. current NAV is 10.95.. should i remain invested or switch to some other fund?
Comment by Shabbir Bhimani on 21 December 2009:

Sumit, see http://shabbir.in/best-infrastructure-funds/
Comment by Tarun on 25 December 2009:

Dear Sir,

I have to invest around Rs 50,000. May i know where i have to invest for tax saving purpose
Comment by Shabbir Bhimani on 26 December 2009:

Any of the above fund should be good enough.
Comment by Niraj on 29 December 2009:

Hi Shabbir,

I am new in investment and have to invest Rs. 40,000 for tax saving purpose. Please suggest.

Thanks
Niraj
Comment by Shabbir Bhimani on 29 December 2009:

The list of funds are there for you to choose. What else you are looking for ?
Comment by Satyajit on 30 December 2009:

Hi
I am going to invested a lum sum amount in bharati axa tax saver(dividend) and IDFC tax saver( Dividend option). Is it a good time to investment .
Comment by Shabbir Bhimani on 30 December 2009:

May be but I do not like the funds you have opted for.
Comment by yasharth on 31 December 2009:

I was looking into the dividend dates of canara robeco (or for that matter any MF) and it has declared a dividend of Rs 3 on 28th March 2009. How do I know that these dividends have already been paid and fresh dividends will be declared this year, or the payout will be done in the near future. In the latter case, if I invest in it now,I will be getting a dividend of 3 on every unit I hold?
Comment by Shabbir Bhimani on 31 December 2009:

Track your bank to see that they get credited.
Comment by Manoj on 2 January 2010:

Which is best mutal fund to buy for tax saving please suggest.
Comment by Shabbir Bhimani on 2 January 2010:

Thats what is done in the article Manoj
Comment by prasad on 3 January 2010:

pls anyone tell me how to invest n where , bcz im loosing 8100 rs per month as income tax pls reply
Comment by Shabbir Bhimani on 3 January 2010:

Invest in any of the above fund and that would give you lot of tax saving.
Comment by hitesh on 5 January 2010:

Sir,
I have planned to invest 1000 as SIP in tax savings fund. Which funds should i opt for ?
Comment by Mayur on 10 January 2010:

ASAK Shabbir bhai

i have to invest 20000 INR to save my taxes .I am planning to invest in tax saver mutual funds. I am new to it and while surfing net i came across your web site .I have gone through moneycontrol.com that states two mutual funds Birla Sun Life Tax Relief 96 (G) & Birla Sun Life Tax Relief 96 (D).

You have also listed them to be best but whihc one of them is good one with 10.33 nav or other with 88.41 nav?

Which one should i choose HDFC or Birla ?

Also what is your opinion about Can Robeco Eqty TaxSaver (G)with NAV 22?

please advice
Regards
Mayur
Comment by Debasish on 10 January 2010:

Hi,

I have the following doubts plz kindly write in detail,

1. Should one look for the how much returns we are getting or how much dividends we are getting? If I will compare the Sundaram BNP Paribas Tax saver(G)’s NAV with Sundaram BNP Paribas Tax saver(D)’s NAV then I am finding Sundaram BNP Paribas Tax saver(G)’s NAV provide me good return as compared to Dividend. So I would prefer the Growth option. Please suggest me.

2. I have without any idea, I did a SIP of Rs1000 for Birla Tax relief 96. Is that a good one or not??

3. But for which Mf (For tax saving & for Equity diversified fund) you will suggest.
Comment by Shabbir Bhimani on 11 January 2010:

Hitesh, I have the list which are best according to me. Select the ones you prefer from the above list.
Comment by Shabbir Bhimani on 11 January 2010:

When going for Tax Saving I always prefer Dividend option and if you have the question why see http://shabbir.in/full-tax-saving-without-investing-one-lac/
Comment by Shabbir Bhimani on 11 January 2010:

Debasish
1. Nav of Dividend decreases by the amount they pay the dividend and so its like you get some money back yearly and so Nav would always be different in both the option but return is always the same.
2. Good.
3. All in my ebook.
Comment by Ritu on 12 January 2010:

Hi Shabbir,

I am planning to invest 50K as mentioned below.
10K -> Birla SL Tax Relief 96 (G)
10K -> Birla SL Tax Relief 96 (D)
15K -> Can Robeco Eqty TaxSaver (G)
15K -> HDFC Tax saver.

Is it seems to be fine or you advice something else.
Comment by Shabbir Bhimani on 12 January 2010:

Ritu, It looks fine.
Comment by chidambarathanupillai m on 13 January 2010:

MY FOLIO NUMBER 1014086117 ; CUSTOMER REF;B121431014086117 KINDLY SEND STATEMENT ON CURRENT DATE
Comment by Anita on 13 January 2010:

Hi Shabbir,

I have 60K to invest in this month to save on taxes. On 8-Jan-08,I invested 32K in Reliance ELSS Tax Saver -G ( One time purchase).Last year i have not invested in Reliance. What do you suggest, should i continue in Reliance ELSS or opt someother scheme.Is canara Rebeco & SBI Magnum ( one time purchase ) safe option?

I also invested 25 K in Bajaj Century plus on 21-Jan-08. I could not pay last year’s premium. The policy is in the lapse status.Kindly suggest if it is wise to renew this or opt all together a new one.

Thanks & Regards,
Anita
Comment by Shabbir Bhimani on 13 January 2010:

Any fund you have done are good enough and I have listed the best according to me and you can opt for your list or even my list. Its all the same.

Now about your Policy Lapse I would suggest you renew it first. Then either you can continue or break it so you get whatever you would get anyway for that policy. Just remember to ask if you need to pay more to get less if you break the policy in between
Comment by Anita on 13 January 2010:

Thank you Shabbir for a quick reply.
I will invest as suggested by you.

Have a nice day!
Comment by Hitesh on 15 January 2010:

Dear Sir,

I have invested SIP of 1500 in Birla Sunlife 96 tax saver (dividend)two days before at NAV of 88.31
Now i want to invest a lumpsum 20000 in tax saver.
I thought of following options
1. Invest whole amount in Birla Sun life again.
2. Invest whole amount in some other fund (from list put up on ur page)
3. Invest 10000 in one and 10000 in other fund (from the list of funds on ur page)
Please suggest me which is better option from above or if you have any thing better then let me know.

Thanks
Comment by Shabbir Bhimani on 15 January 2010:

Any of them would do. Not much of a different.
Comment by Ravi Kundalia on 21 January 2010:

Dear Sabir,

First time i came across your site.. Seems fine at first time.. I have gone through your proposed mutual fund (ELSS Specifically).. I hope you know regarding portfolio / factsheet of same…

Do u think, is it a wise investment to invest money in ELSS in such volatile market.. index is at 17.5 K.. all time high is apprx 23 K.. what return it will give me at this stage..?.. from my point of view, we won’t get remarkable return by investing in ELSS at this stage of market… We should not forget that ELSS money will be locked by 3 years after your investment.. so what you think dear about the market after 3 years from current stage of 17.5 K..?..

I am just of 24yr.. you seems to be more experience in this field.. do u know any tax saving investment where there will be share like 80:20 or 60:40 or 40:60 between equity:goverment securities IN MUTUAL FUNDS..?.. Don’t tell me scheme like endowment, pension plans etc where 20-40% allocation charges applied at first investment only.. ..

I hope you can help me.. Waiting for your reply..
Comment by Shabbir Bhimani on 21 January 2010:

Ravi, Investing in ELSS is not an option its a thing people need to do to Save Tax and if there is return thats the best part of it. Its something like you invest 100k or else give me 33k till March.

I would suggest you also read my other article – http://shabbir.in/better-way-to-save-tax/

And then I will be open to dialogue.
Comment by Ravi Kundalia on 21 January 2010:

“Open to dialogue..!!!!!..”… it seems that you are being ready for some kind of WORD WAR or something like… .. Actually you are being angry un-necessorily.. My question is simple, in fact very simple..

Current market is 17.5 K.. all time high is 22-23 K.. Correct..?.. If you are investing (let say 75K) in ELSS, do you think that you will get same value after 3 yrs of locking period ?.. As per my knowledge, ELSS having their own portfolio & i.e. too on equity base fully… Is there any kind of other mutual funds which are tax saving but investing in very wide range of mid cap / small cap / large cap which can survive against any kind of storm in share market..?..

Whatever fund you have shown above are basically investing in large cap .. majority in ril / sbi / ongc etc… These all companies are major part of indices.. what if indices fall to bottom after 3 yrs..?.. we can’t withdrawn our money as locking is of 3 yrs.. So is it safe to invest in ELSS at 17.5 K ?.. is there any MFs which under tax saving umbrella but investing in some mines and other sectors which are only a bit affected by index..?..

Hope you will get my point by such brief writing.. Waiting for your reply dear..

Take care..
Comment by Shabbir Bhimani on 21 January 2010:

No I am not angry but what I say is we have very little option when it comes to non-equity based tax saving and good returns without paying the administrative cost.

Now coming to the point of investing at 17k is a risk to an extent which many should not take but then what can be done for Tax. LIC for a 7% return and locking of 20 years with lots of admin charges you don’t know.

So I would still prefer funds.
Comment by yagnesh on 21 January 2010:

dear sir,
please tell me about good tax saver mutual funds
Comment by Ravi Kundalia on 22 January 2010:

ok shabbir.. got ur point.. thanx for ur advice…

do V have any funds which are under tax saving umbrella and dey are investing in small caps or coal/ gold mines or something like different than indices..?.. do u know any such funds ?… tell me about DSP Blackrock .. is thier portfolio is also for large / mid caps ?…

:-/
Comment by Shabbir Bhimani on 22 January 2010:

I am not very aware of many such funds but about the DSP Funds you can see valueresearchonline fund card for any fund to see where they invest mainly
Comment by chidambarathanupillai m on 22 January 2010:

my folio number 1014086117,customer ref;8019831014086117 scheme 02 tax relief 96 fund elss-divident ,what is the present value?
Comment by spjnagid on 23 January 2010:

my elss(fortis tax saver) duration(3yrs) completed,now i want to reinvest same amount ,is switching from fortis tax saver (growth) to fortis tax saver (dividend) will provide me the tax rebate exemption under section 80.c,kindly clearify at earliest and respond at mail id.
Comment by Ravi Kundalia on 23 January 2010:

So shabbir.. if i am investing..

10 K – Franklin
10 K – Reliance
8 K – Icici pru
8 K – HDFC long term adv
5 k – Sundaram BNP
5 K – SBI magnum

and rest 40 K apprx in PPF & gov securities like FD, Pension plans.. den will it be right at the age of 24 ?… or should go more with ELSS ..?..

Thanx..
Comment by Shabbir Bhimani on 23 January 2010:

spjnagid, completed now does mean its still under locking period.
Comment by Shabbir Bhimani on 23 January 2010:

Ravi, I am never a fan of FD and other schemes for multiple reasons. I try not to invest in areas where they pay interest. Thats my personal choice but for you I would suggest more equities because you hardly have any liability
Comment by debraj on 25 January 2010:

Hi,
I am a small investor looking to invest Rs 12,000 in SIP option from April’10. I am already investing in SBI MAGNUM TAX GAIN(D) for the past 2 years in SIP option.
Should I invest in 2 ELSS schemes or only 1 ELSS scheme? I was planning to start investing in both HDFC TAX SAVER and ICICI PRUDENTIAL TAX PLAN from April’10(2 * Rs 500 * 12). Does that sound OK or u recommend something else?
Comment by Shabbir Bhimani on 26 January 2010:

debraj, I don’t think it will matter too much if you invest in one or two funds
Comment by debraj on 26 January 2010:

Even I invest in 1 fund, which fund should I choose? HDFC TAX SAVER or ICICI PRUDENTIAL TAX PLAN? Please do not tell either:)
Comment by Shabbir Bhimani on 27 January 2010:

HDFC Tax Saver because I have invested in that one.
Comment by Saurabh on 27 January 2010:

Well I have purchased Dlf on 429, then on 402, then on 369, then on 354, all with 100 in volume,also 50 shares at 352, I was unaware about stoploss that time but now I know but its too late, plz help me and tell if I should sell my all shares in loss now or wait..
I am totally confused. plz give right suggestion if you can.
Comment by Shabbir Bhimani on 27 January 2010:

Whats your time Horizon ?
Comment by Tejas Dandekar on 28 January 2010:

Hi Shabbir,

if i wanna invest in ELSS …whether i should invest small sip’s in diff ELSS i:e canara tax saver,birla tax relief 96,sbi magnum etc..or select only say “Canara robecco” which will be better option??
Comment by Shabbir Bhimani on 28 January 2010:

Investing in more than one fund is not much of a difference than investing in one fund.
Comment by Saurabh on 29 January 2010:

sorry for late response, but I am possesing them from around 3 or 4 months, means with the time as the rate gets reduced I went on purchasing them.
Comment by Ravi Kundalia on 29 January 2010:

Shabbir,

switching option is not for tax saver mutual funds na ?.. means in ELSS..?..

Is there switching options available in ELSS (tax saver mfs)..?..

Thanks.
Comment by Shabbir Bhimani on 29 January 2010:

You can switch from ELSS to other ELSS fund of the same fund house
Comment by Shabbir Bhimani on 29 January 2010:

Saurabh, I was asking how much more time you can give to holding this stock.
Comment by Zafar on 1 February 2010:

Hi Shabbir,

Since last 2 years i had invested my full amount in Tax Saving FDs.
This year i am looking forward to start investing in ELSS for Tax Saving, after getting comparisons on the returns between ELSS & FD.
Since this is the first time i am investing, should i put my entire amount in ELSS (splitting 100% in any 3 MFs listed above by you) or do you think for safety sake, i should keep 30% in FD and 70% in ELSS. My age is 29yrs.

Also to start of in MF, at this point in time, what is the procedure of the same. Can it be done by self online, or do we need to go through some Financial agents who will always be needed to buy / sell MF. Please guide me.

Regards,
Zafar
Comment by Shabbir Bhimani on 1 February 2010:

Zafar, I would have done 100% in ELSS but if you even go for 70% that would not be bad to start with and if you think its more worth it you can make 100% next year.

Also read

http://shabbir.in/better-way-to-save-tax/
Comment by Zafar on 1 February 2010:

Hi Shabbir,

Thanks for your quick response & useful link.
Can you also please guide me on how to start investing in MF, i mean what is the exact procedure involved here.
Can it be done by self online, or do we need to go through some Financial agencies, who will do all the formalities needed to buy / sell MF.
Please guide me.

Regards,
Zafar
Comment by Shabbir Bhimani on 2 February 2010:

Get an account in ICICIDirect and then its just few clicks to invest in MF
Comment by Akshita on 2 February 2010:

Hi Shabbir,

I plan to invest 50000 in tax saving MFs. But mu financial advisor is suggesting Birla Sunlife Dream Retirement Plan which is an insurance cum equity plan. Please suggest what you think would be best. I am 40 yrs old and would like this to be a single time investment.

Thanks,
Akshita
Comment by Shabbir Bhimani on 2 February 2010:

Dont go with Insurance if you plan to save Tax
Comment by Dhiraj on 2 February 2010:

First of all I would like to thank Shabbir for the information he is giving to all of us; and I totally agree with Shabbir about investing in ELSS – Section 80C Category investment.

Its all about getting rid of the mental block that we all have.
1. By investing 1 Lac; one saves approx 30K-33K for the current year on TAX
2. Although a risk; The Same 1 Lac invested; has a good chance of giving atleast some return on a 3 year lock-in-period. 3 years is good enough period to give some profits.
market is currently trading at 16K+ ; even if it becomes 20K after 3 years; you still made some profit.
Not to forget; your 1 lac is already saving 30K to 33K of tax for that year.
3. Note: One will have to pay tax on the dividends though or lump sum amount at the point of maturity / withdrawal

I totally agree with Shabbir; i.e. if your investors themselves are going to invest in funds and other items; then why not do it yourselves. Dont fear.

For those fearing a bit; you could look for schemes under
Section 80C + 10(10D) — ULIP’s are good example
No tax on Principal amount + No tax on interests + No tax on total amount on maturity
But then; I would suggest to re-calculate or make estimates of the profit for the amount invested for a minimum term of 10years having a lock-in-period of minimum 3 to 5 years.

ELSS – the best way to save TAX.

May be Shabbir can add more; I am not an expert.
Thanks Shabbir.
Comment by Dhiraj on 3 February 2010:

Regarding
Birla Sun Life Tax Relief 96 OR similar 10+ year old funds

The following is my personal view and based on my personal estimates;
Considering market trend and mindset change that the market crash has brought into; it is very likely to bring about a change in strategy for future development.

Since BSL 96′ is an aggressive fund (as opposed to balanced funds)
and it being rated as the best for its 13 year performance; it may not be the best for the next 3 years.
For me – it looks saturated; it should perform as good as others; nothing special.

From its current state and considering market trading at 16K+
This fund should grow at around 8%-10% rate or even less; for the next 3 years.

Still ELSS is the best way to save tax; and I would recommend that you invest wisely ; making a good study of the funds already existing and recently(3-5 years old) launched funds; if you are looking to make profits from equity.

Since you need to pay tax on your dividends or maturity amount; as an investor you would want the profit to be good enough.
Comment by kunal on 3 February 2010:

Hi Shabbir,
Indeed a good article.
I’m a little confused over investing in BNB Paribas Tax saver and Canara robeco.. which one would be wise investment for high dividend and currently i would invest lump-sum ~40k.
Comment by kunal on 3 February 2010:

oops , i did a refresh on the comment page, pls ignore the above comment.
Comment by Dhiraj on 3 February 2010:

Here is something more…
Now… if you are willing to invest in ELSS MF’s …
then,
why not invest in equity directly ?

Are you ready to lose the 30K in tax ???
why would you want to save 30K tax by investing 1 Lac rupees ???

Assume this,
From April 2010 you have 1 lac in hand which you would want to invest to save 30K tax for the year 2010-2011.
But then instead, you decide to invest in equity directly such that you make atleast 10-20K per month.

From my observation even uneducated men and WOMEN are able to make that much by investing in equity; trading for the month.
And, if you are slightly educated; its a shame if you cant make that much; at least I look at it that way.

Note:
Since this would be short term trading; you will have pay tax.
So you want to trade in such a manner such that even after paying tax you land up making a profit of atleast 5K rupees per month.
To make that amount is absolutely easy; if you use your brains.

So now you would have 60K at the end of the year + your 1 lac which you used to make this money.
And the 30K that you would have lost in tax would actually be covered; giving you a total profit of 30K. (60K – 30K tax)
Now that’s investment.

Eventually You don’t land up in 3 year lock-in-period in ELSS.
You would have helped companies grow; as well as made some profit; plus covered your tax.

Its all a mental game.
Lear to play it; and always be ready to lose.

All the best.
Comment by Shabbir Bhimani on 3 February 2010:

I do not agree on the fact that you can earn month after month 10% month on month.

If that is the case you actually can more than double each year but that is not always possible.
Comment by Dhiraj on 3 February 2010:

Why Not ???
1 Lac for 30 days.
– 30 days is a lot.
Comment by Hitesh on 3 February 2010:

Hi Shabbir,

I had started ULIP (growth) from Max New York in sep 2005 with annual premium of 15000 just for the sake of tax saving. But i am not satisfied with the performance. As against my invesment of Rs 67000 , current value as on date is 64000.
Now when i some study about tax savings instruments, i realised that good portion of my amount went in all the charges (allocation, admn , fund management etc).
Should i stop paying any more premiums or continue for some more period ?
will i be applicable short term gain tax if i withdraw the money now?
Comment by Shabbir Bhimani on 3 February 2010:

Hitesh, You probably are out of the charges if I am not wrong but still I would prefer you read

http://shabbir.in/better-way-to-save-tax/
Comment by Shabbir Bhimani on 3 February 2010:

Thats asking for too much but if you can do that try becoming a fund manager ASAP Dhiraj and start managing the fund of your family as we may have the billionaire in the making soon
Comment by Dhiraj on 3 February 2010:

Well, All I can say is

Learn to explore.
Play to Win; And Be Ready to Lose.

I would not want comment on equity trading at this moment.
lets keep it to our own selves.

My Preference for tax saving:
1. Equity Trading or a well thought short-term Side-Business.
2. ELSS
3. ULIP
4. Govt Schemes like PPF, NSC, FD, etc…
5. Housing loans, etc…

If I ever become a billionaire; you will know for sure.
But that’s not my target; all I want is, to live my life happily.

I have already taken the jump; and I don’t intend to cross the ocean swimming; I don’t expect a ship; but a small hi-tech boat will do the job for me.

Note:
If you are salaried person; then you PF contribution is also a part of the tax saving; so you really dont have to invest 1 Lac to save 30K tax.

Example:
if your PF contribution is 25K per year; you will only have to invest 75K to save tax. don’t invest the entire 1 Lac.

Anyways; as we all differ; so will our strategies.
Shabbir is always available and should be a good guide.

Thanks Shabbir for helping out.

Take care and Cheers,
Dhiraj
Comment by P.Ramachandra Rao on 3 February 2010:

I would like to purchase tax saving bonds or mutual funds for Rs one
lakh before the closure of the current fiscal with lowest locking period and handsome yield. Kindly advise options. I am senior citizen and a retired BSNL officer.
Comment by Shabbir Bhimani on 4 February 2010:

Yes it looks good on paper but you should also be realistic. Definitely you can make handsome gains in few months but that may not be the case month after month.
Comment by Satish on 4 February 2010:

Please tell a ELSS scheme which is planning to give immidiate dividend in few months probably as high a 30% to 50% of investment value not NAV
Comment by Shabbir Bhimani on 4 February 2010:

Satish see http://shabbir.in/dividend-history-mutual-funds/
Comment by vivek kedia on 5 February 2010:

I want to invest in mutual funds for tax releif of Rs 30k .
Pls suggest me top three higest return payer fund in last year so that i can invest equally 10k each.
Comment by VK Gupta on 8 February 2010:

Dear Sir,

I have to invest in tax saving funds,kindly suggest some best funds
will it be ok if i invest 30K in one go. can i invest on line or i will have to visit some fund house for that.

regards.
Comment by kanchana on 9 February 2010:

Good Evening.
I am to save Rs.10,000-00 in addition to other savings for I.T. benefits. I am little confused whether to save in ELSS Fund or ULIP. Pl. suggest.
Thanking you.
Comment by Shabbir Bhimani on 10 February 2010:

kanchana, Please read http://shabbir.in/better-way-to-save-tax/
Comment by Mothilal on 1 March 2010:

I plan to invest around 6,000 or 8,000 pm in ELSS schemes with SIP option. But i dont know which funds are best(as lot of funds exist).

1. Suggest me 4 or 5 good ELSS funds for 3 to 5 years.
2. Pls advice whether i can invest whole amount in 1 fund(HDFC Taxsaver) or good to invest in several funds?
3. which option dividend or growth is best? (I need long term gains)
4. I have to start invest in march or april for FY2010 tax saving?
5. Where i can approach for opening this SIP, and monthly how i pay the SIP amount? Via Online or Manual?
6. I having ICICI bank account, but as you suggested above for Icici direct account. I feel its better to open with any agents for proper guidance and support.

Please suggest me…
Thanks in advance…
Comment by ARUN KAPOOR on 3 March 2010:

I WANT TO INVEST RS. 1.00 LACS WITH A VIEW TO HAVE PENSION – FIXED MONTHLY INCOME AFTER 13 YEARS.

PLEASE SUGGEST.

REGARDS
Comment by Shabbir Bhimani on 3 March 2010:

13 Years is a too long period for one fund to be having an investment into and I think you should be able to churn it time and again.
Comment by Mothilal on 4 March 2010:

I plan to invest around 6,000 or 8,000 pm in ELSS schemes with SIP option. But i dont know which funds are best(as lot of funds exist).

1. Suggest me 4 or 5 good ELSS funds for 3 to 5 years.
2. Pls advice whether i can invest whole amount in 1 fund(HDFC Taxsaver) or good to invest in several funds?
3. which option dividend or growth is best? (I need long term gains)
4. I have to start invest in march or april for FY2010 tax saving?
5. Where i can approach for opening this SIP, and monthly how i pay the SIP amount? Via Online or Manual?
6. I having ICICI bank account, but as you suggested above for Icici direct account. I feel its better to open with any agents for proper guidance and support.

Please suggest me…
Thanks in advance…
Comment by jugal baheti on 4 March 2010:

i want to invest 100000 in elss pl advise best scheme
Comment by Shabbir Bhimani on 5 March 2010:

Mothilal the list I have above is just good for you and one or more funds does not make much of a difference when it comes to ELSS and so I prefer one fund per year.
I will also suggest you to look at http://shabbir.in/dividend-or-return-tax-saving-funds/
Comment by Srikanth Matrubai on 7 March 2010:

Shabbir Bhai, I think we need more people like Hiten. They play the role of Devils Advocate.
Comment by Ravi Kundalia on 10 March 2010:

Dear Shabbir,

Again i require your help… My age is 24 & working as an engineer with one reputed company.. I have already invested more than 1 lacs rs in past one year through ELSS… ofcourse few thousands of PPF & pension policy of birla sunlife also started.. But still i have not insured my self with any insurance policy..

With the interaction of few seniors of my company, they advised me to take a lifecover policy at earliest.. What do you think…?.. should i take life policy at this age or not..?.. They advise to take LIC Wealth plus plan as it is good from their point of view .. and i don’t know any another insurance policies..

Can you guide me whether should i take any insurance policy or not ..?.. and if yes then how much coverage i should take (if CTC is more than 5 lacs currently)..?.. and ofcourse, through which insurance policy from your point of view ..?..

Thanks.. hoping nice answer asusual..

Take care..
Comment by Shabbir Bhimani on 11 March 2010:

Ravi, For insurance I think term insurance is your best bet provided you can manage to take it because no sales man will offer you or recommend you term insurance.