What is the difference between ELSS and SIP?

Tax saver funds, often known as ELSS (equities Linked Savings Scheme), are mutual funds that invest primarily in stocks and equity-related goods.  

ELSS mutual funds are highly sought-after options for tax-efficient investments since they provide tax benefits under Section 80C of the Income Tax Act in India. Seasoned fund managers usually run the top ELSS funds and have a history of reliable performance. It is important to remember, too, that ELSS mutual funds have a three-year obligatory lock-in period during which investors are not permitted to withdraw their money without incurring penalties.  

On the other hand, a Systematic Investment Plan, or SIP, is an organized approach to investing that entails consistently making set investments in mutual funds at specified periods, usually once a month. Even while SIPs apply to ELSS funds among other mutual fund types, they benefit from rupee-cost averaging, which helps to lessen the impact of market volatility on investments gradually.

In summary, SIP is an investment strategy involving recurring mutual fund investments, including ELSS, to attain financial goals. With this approach, you can steadily work towards your financial aspirations. On the other hand, ELSS funds are tax-saving funds with a lock-in term that primarily invest in equity.