Merits and Demerits of Equity Linked Saving Scheme
Advantages of ELSS over NSC and PPF
- Main advantage of ELSS is its short lock-in period. Maturity period of NSC is 6 years and PPF is 15 years.
- Since it is an equity linked scheme earning potential is very high.
- Investor can opt for dividend option and get some gains during the lock-in period
- Investor can opt for Systematic Investment Plan
- Some ELSS schemes also offer personal accident death cover insurance
- Provides 30 to 40% returns compared to 8% in NSC and PPF
Disadvantages of ELSS
- Risk factor is high compared to NSC and PPF
- Premature withdrawal is not allowed but it is allowed in other instruments in some specific conditions