What are ELSS mutual funds & how to invest in them?

Equity Linked Savings Scheme (ELSS) mutual funds have emerged as a popular investment avenue in India, blending tax benefits with the potential for wealth creation. In this comprehensive guide, we will delve into the fundamentals of ELSS funds, exploring their features, benefits, and the step-by-step process of investing in them.

Understanding ELSS Mutual Funds

ELSS funds are a category of mutual funds that primarily invest in equities and equity-related instruments. Unlike other equity funds, ELSS funds come with a unique feature of offering tax benefits under Section 80C of the Income Tax Act. Investors can claim a deduction of up to Rs 1.5 lakh from their taxable income by investing in ELSS funds, making them an attractive option for tax-saving purposes.

One distinctive characteristic of ELSS funds is their comparatively short lock-in period of three years. This is the shortest among all tax-saving investment options under Section 80C, providing investors with liquidity after the lock-in period.

The Risk and Returns aspect of ELSS funds must be considered. Since they invest a significant portion in the equity market, they carry a higher level of risk compared to debt funds. However, this risk is accompanied by the potential for higher returns over the long term, making them suitable for investors with a higher risk appetite and a longer investment horizon.

How to Invest in ELSS Mutual Funds?

Investing in ELSS mutual funds involves a systematic process that can be easily navigated. Here’s a step-by-step guide:

  1. Research and Selection:
    • Start by researching different ELSS funds based on your financial goals, risk tolerance, and the fund’s historical performance.
    • Look for factors such as the fund manager’s track record, expense ratio, and the portfolio’s diversification.
  2. Complete KYC Process:
    • The Know Your Customer (KYC) process is mandatory for all mutual fund investments. Submit the required documents, including identity proof, address proof, and photographs, to the fund house or a registered KYC agency.
  3. Choose Investment Amount and Mode:
    • Decide whether you want to make a lump sum investment or opt for a Systematic Investment Plan (SIP).
    • Determine the amount you want to invest based on your financial capacity and goals.
  4. Fill Application Form:
    • Obtain the application form from the fund house, available online or at their offices and authorized distributors.
    • Fill out the form with accurate details, including your investment amount, mode of investment, and other relevant information.
  5. Submit Documents and Payment:
    • Attach the necessary KYC documents along with a cheque or demand draft for the investment amount.
    • Alternatively, many fund houses allow online payments through net banking or other digital modes.
  6. Monitor and Review:
    • After investing, it’s crucial to regularly monitor the performance of your ELSS investments.
    • Consider consulting with a financial advisor for periodic reviews and adjustments based on market conditions.


ELSS mutual funds offer a unique blend of tax benefits and wealth creation potential. By understanding their features and following a systematic approach to investment, investors can make informed decisions aligned with their financial goals. As with any investment, it’s crucial to conduct thorough research, stay informed, and seek professional advice to navigate the dynamic landscape of mutual fund investments. In the ever-evolving landscape of financial technology, platforms like Fello have simplified the investment journey, providing investors with a user-friendly interface and a seamless experience. Fello, with its intuitive design and robust features, offers a convenient avenue for individuals looking to invest in ELSS mutual funds.

In addition to being a user-friendly investment platform, Fello distinguishes itself as a reward-based savings app, adding an innovative layer to the investment experience. By incorporating a rewards system, Fello encourages users not only to grow their wealth through investments but also to enjoy perks and benefits along the way. Investors on the Fello platform can earn rewards for their disciplined savings and investment behavior, creating a symbiotic relationship where financial growth is complemented by tangible incentives.

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*The listed financial assets are subject to market risks. Please read all asset related information carefully or optionally contact us before investing.