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Merits and Demerits of Equity Linked Saving Scheme

Advantages of ELSS over NSC and PPF

  • Main advantage of ELSS is its short lock-in period. Maturity period of NSC is 6 years and PPF is 15 years.
  • Since it is an equity linked scheme earning potential is very high.
  • Investor can opt for dividend option and get some gains during the lock-in period
  • Investor can opt for Systematic Investment Plan
  • Some ELSS schemes also offer personal accident death cover insurance
  • Provides 30 to 40% returns compared to 8% in NSC and PPF

Disadvantages of ELSS

  • Risk factor is high compared to NSC and PPF
  • Premature withdrawal is not allowed but it is allowed in other instruments in some specific conditions

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