Why ELSS?

Ideal Investment Avenues

Agenda

• About ELSS

– Key Differentiation

– Advantages

• ELSS – Comparison

• Why ELSS?

• Why Equities?

• Why India?

• Fund Manager Advantages

• Tax Planning

• Past Performance

• Current NFOs

• Summary

• About Us – Services

About ELSS

• An ELSS (Equity Linked Savings Scheme) is a mutual fund scheme that invests in equity & equity-related securities

• ELSS are also eligible investments under section 80C of Income Tax Act 1961, where the investments up to Rs.1 Lac* is eligible for deduction from your total income. Thus you can easily save up to Rs.33,660/- in taxes by investing in ELSS.

• ELSS have a lock-in period of three years. This allows the investors to benefit from the long term growth potential of equities.

* For Financial Year 2006-07

ELSS – Key Differentiation

ELSS is the only investment product that offers ….

Twin Advantages

• Equity Returns • Tax Benefits

ELSS – A Comparison

Instrument Expected Returns Lock-In Period

National Savings Certificate - NSC 8.16% 6 years

Public Provident Fund - PPF 8.50% Up to 15 years

Mutual Fund ELSS Around 15%-20% 3 years

Investment 1 Lac End Value of Investment in Rs. Lac after - Years

Avenue Returns 3 6 8 10 15 20

NSC 8.16% 1.27 1.60 1.87 2.19 3.24 4.80

PPF 8.50% 1.28 1.63 1.92 2.26 3.40 5.11

ELSS 15.00% 1.52 2.31 3.06 4.05 8.14 16.37

Mutual Fund ELSS returns are the assumed returns dependent on the markets and are not guaranteed or assured

Why ELSS?

• ELSS offer the following advantages over traditional tax saving investments

– Potential for higher returns– No limits on maximum investment amount – Lower Lock-in period

Advantages of being a Mutual Fund scheme– Tax benefits as an Equity scheme …

• Tax free dividends • No Long-term Capital Gains

– Choice of AMCs & Schemes and also Options (growth / dividend / reinvestment)

– Convenience / Flexibility of investing (Lump sum / SIP / Switch / STP)

Why Equities?

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Equities in the long term are not risky !!!

Equities (represented by Sensex) has outperformed all other asset classes … In past 27 years, BSE Sensex has delivered approx. 20% returns yearly

India – Why Invest in Equities

• 9% GDP growth makes India among the fastest growing economies in the world. India presents a fundamentals led growth story expected to keep the pace high for at least a few decades ..

• Indian companies today are very competitive – have growing cost-effectiveness, a confident management, global outlook & plans, etc. The Profit growth rates are very encouraging & are expected to only continue

• As profits grow (between 15%-20%) the market would also grow at such a rate over long term since the prices always trail the profits.

• The market valuations are now fair and stocks are not overvalued. For a long-term investor, the opportunity to create wealth over time is great.

ELSS – Advantages to Fund Manager

Tax Planning with ELSS

Taxable Income

Tax before Planning

ELSS Optimal Amt.

New Taxable Income

Tax After Planning

Savings

150,000 5,100 50,000 100,000 0 5,100

300,000 40,800 100,000 200,000 15,300 25,500

500,000 102,000 100,000 400,000 71,400 30,600

900,000 224,400 100,000 800,000 193,800 30,600

1,200,000 347,820 100,000 1,100,000 314,160 33,660

You can save taxes up to Rs.33,660/- by investing the optimal amount in ELSS schemes till 31st March for the current F.Y.

Summary

• India is among the most attractive investment options. Don’t miss the bus !!!

• Treat long-term wealth creation as a primary objective. Treat tax savings as additional / bonus.

• Invest before 31st March !!!!

Happy Investing