As mentioned, ELSS Fund follows a mandatory lock-in period of three years. The lock-in period starts from the very day you purchase the fund units. The maturity date of ELSS Fund units differs based on your investment mode.
With lumpsum investments, you buy all fund units in one go at the same time. Given this, all units mature on the same date. For instance, if you made a lumpsum investment on January 20, 2023, all your fund units will mature on the same date i.e., January 20, 2026.
With SIP investments, you buy fund units at regular intervals as and when a contribution is made. Hence, the units mature at different times. Refer to the following tabular representation of Mutual Fund SIP investment to understand its maturity.
| Purchase date | Net Asset Value (NAV) | Number of units purchased | Maturity date |
|---|---|---|---|
| January 01, 2023 | Rs 50 | 100 | January 01, 2026 |
| February 01, 2023 | Rs 49 | 102.04 | February 01, 2026 |
| March 01, 2023 | Rs 55 | 90.91 | March 01, 2026 |
Once the ELSS funds lock-in period ends it is not necessary for you to redeem the investment. You can continue to be invested in the fund. However, on the completion of the lock-in period, the fund will be treated like an open-ended equity-oriented mutual fund scheme. Hence, you must consider the associated risk and tax implications.
ELSS Fund is a great investment option for every investor. However, if you are an investor with the following investment specifications the ELSS funds are a must-invest for you:
There is no such thing known as the right time to invest in any type of mutual fund. The general advice is to invest in mutual funds at an early age. This gives you a chance to make the most of your high risk-appetite, take aggressive decisions, and maximise returns. ELSS funds offer the dual benefit of wealth creation and tax efficiency.
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