What you should know before investing:

• ELSS funds have a lock-in period of three years and, therefore, it is mandatory to remain invested for at least 3 years. Of course, you can remain invested for more than three years. It is recommended to invest your money in this fund for a longer period of time as the returns on these funds are dependent on the market, which is volatile in nature in the short term. You may not get the desired returns in a 3-year time period and there are chances of even incurring losses. So, it is better to remain invested for a longer period of, say, 5-7 years.
• ELSS funds come under high-risk category as these funds invest in equity and, therefore, the risk is higher as compared to other tax-saving schemes. Investors who wish to invest in these schemes should first assess their risk appetite and only then decide whether to invest or avoid.
• As the name suggests, these funds invest a major chunk, i.e., 80 per cent, of their total assets in equity. They diversify their portfolio of investments by investing in various companies across different sectors of the economy so as to deliver optimal returns.