ELSS (Equity Linked Savings Scheme) is a tax-saving mutual fund that qualifies for deduction under Section 80C up to ₹1.5 lakh per year. It has a 3-year lock-in—the shortest among 80C options—and invests primarily in equities.
Why FIRE Investors Use ELSS
- Tax benefit — Up to ₹46,800 tax saved (30% slab) per year
- Equity exposure — Builds long-term wealth via stocks
- Short lock-in — Only 3 years vs 15 for PPF, 5 for tax-saving FD
- SIP allowed — Invest monthly and average your cost
ELSS vs Other 80C Options
| Option | Lock-in | Returns | Equity |
|---|---|---|---|
| ELSS | 3 years | Market-linked | Yes |
| PPF | 15 years | ~7–8% | No |
| NPS | 60 | Market-linked | Yes |
| Tax-saving FD | 5 years | ~6–7% | No |
For FIRE, ELSS fits well if you want equity exposure and flexibility. Pair with PPF and NPS for a balanced 80C portfolio.