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8/4/2014
Don't make the mistake of opting for the dividend reinvestment plan, under which the dividend payout is reinvested to buy more units of the scheme.
Everytime this happens, the new units get locked in for another three years.
So when you want to exit, there will always be some units still locked in. If you are stuck in the dividend reinvestment plan, you can write to the fund
house and shift to the dividend payout plan.
What is the threshold?
Most equity funds have a minimum investment limit of Rs 5,000, but ELSS funds have a lower threshold of Rs 500.
Newbie investors who want to test the waters before jumping in will find this especially useful. These funds also offer a greater flexibility to investors.
Unlike an insurance plan or a unitlinked insurance plan (Ulip), you don't have to commit multi-year investments. Even a one-time investment of Rs 500
can be held till perpetuity. In the PPF, the investor must make at least one contribution in a year or pay a penalty. However, there is no such
compulsion in ELSS funds.
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