3 years ago I decided to start investing in an ELSS fund, apart from PPF, to save taxes. After a thorough research (eeny, meeny, miny, moe), I decided to go with DSP Tax Saver Fund and L&T Tax Advantage Fund. I went via the SIP route. My first couple of instalments were in Regular plan before realising that there is something called as Direct plan which has lower expense ratio (thank you Economic Times). Below are the key steps that I did over last three years.
- Started SIP in April 2018
- SIP frequency was monthly
- Increased SIP every year
- DSP Tax Saver
- Apr 2019: + 60%
- Apr 2020: + 87.5%
- L&T Tax Advantage
- Apr 2019: + 20%
- Apr 2020: + 16.7 %
- DSP Tax Saver
- If I had surplus funds in a month, then I used to invest them in the fund as lumpsum. Being one of the lucky folks who did not lose his job due to pandemic (no increments though), I was able to invest surplus amount during the blood bath in stock markets of Mar-Jun 2020.
I have plotted the SIP Return, Profit and XIRR of both these funds from April 2018 to Mar 2021.
DSP Tax Saver Fund
SIP Return Chart
From Mar to Jul 2020, I was able to invest additional fund as lumpsum, that’s why the steps are not uniform as they were in previous two years. I continued investing lumpsum after wards also, albeit less frequent, as the market seemed to be very expensive.
Profit Chart
During the market crash from Mar to Jun 2020, two years worth of my investments went down by ~28%. But as of Mar 2021, I am looking at a profit of ~35%.
XIRR Chart
The market crash of Mar-Jun 2020 was so bad that the XIRR calculations went bonkers and resulted in 0% values for sometime during Mar-Jun 2020. From Mar 2020 to Mar 2021 the XIRR has gone from ~-30% to ~+30%.
L&T Tax Advantage Fund
SIP Return Chart
Similar to DSP Tax Saver, from Mar to Jul 2020, I invested additional fund as lumpsum. But the returns in L&T Tax Advantage were always inferior to DSP Tax Saver. That resulted in me pouring more money in DSP Tax Saver.
Profit Chart
During the market crash of Mar-Jun 2020, two years worth of my investments went down by ~35%. But as of Mar 2021, I am looking at a profit of ~30%.
XIRR Chart
Similar to DSP Tax Saver, the market crash from Mar to Jun 2020 caused the XIRR calculations to go bonkers and resulted in 0% values for sometime. From Mar 2020 to Mar 2021 the XIRR has gone from ~-30% to ~+20%.
