Investing in ElSS for FY24: SIP or lumpsum which route should you prefer?

Equity Linked Savings Scheme, commonly known as ELSS, is a type of mutual fund that enables investors in India to build long-term wealth and achieve returns that outperform inflation while also providing tax benefits under section 80C. ELSS funds have a three-year lock-in term and invest primarily in equity or equity-related securities. In contrast to conventional tax-saving investments like fixed deposits, the Public Provident Fund (PPF), and other post office savings schemes, ELSS funds are popular among investors seeking to reduce their tax burden and receive higher returns. Generally, when it comes to mutual funds, SIP is mostly preferred, but since the new financial year has already been started, investors looking for investing in ELSS funds which route should they prefer SIP or lump sump, let's know from different industry experts.

Santosh Navlani, COO, ET Money

Investing via ELSS or lump sum doesn’t matter in mutual funds. Both are ways to invest in equities. SIP doesn’t have any special benefit over lump sum investments. Indian markets have maintained an uptrend in the long run, so if you just invest, you would do well. We have compared monthly SIP returns with annual SIP over different time periods (Refer to the two charts). While the returns in annual SIP were better percentage-wise, the final corpus was higher in the case of SIP. The reason is simple: In the SIP, the investor got a headstart of 11 months.

Ankush Bali, Financial Portfolio Manager- PGDBF | LIMRA | MDRT | AMFI REGISTERED

In FY24 investing Elss the best route will be Sip, lump sum can be done when there is a drastic fall in the market.

Milan Parikh, Managing Director & Co-founder, Jainam Broking Ltd

I personally prefer investing in ELSS through lumpsum route. One of the most important factors in choosing the one out of two ways of investing in ELSS is the cashflow that a person generates. An entrepreneur, for example, might have uncertain cashflows hence should opt for lumpsum route whereas a salaried person having fixed inflow should opt for SIP.

Rajeev Aggarwal, Financial Advisor

Choosing between SIP or lumpsum always depends on your investment goals, risk appetite, and the availability of funds.

If you have a lump sum amount available for investment, and you are confident about the market performance, you can consider investing the entire amount in one go. However, if you are not sure about the market movements and want to reduce the impact of volatility, you can consider investing through SIPs as it allows you to invest a fixed amount at regular intervals, which averages out the market fluctuations over a period of time.

Another advantage of investing in ELSS through SIPs is that it helps you in inculcating a disciplined approach towards investing, and ensures that you invest regularly, without missing out on the opportunities to invest.

Whether to choose SIP or lumpsum for investing in ELSS for FY24, depends on your individual circumstances, and the factors mentioned above.