Financial planning requires expertise, RIAs may be able to help

This would mean a longer wait to recoup capital losses before making a return.

A. If you have a goal within 3-4 years, it is not a good idea to invest in equity funds in order to achieve it. Therefore, ELSS funds are not a good vehicle for this goal. Though you’ve set your return expectations modest at 7%, we’ve been in a bull market in stocks for the last six years, as a result of which most stocks have turned quite expensive, if not overvalued. The markets can correct significantly from here. Should a deep correction materialise, even a bounce-back to current levels can take more than the 3-to-4-year time frame you have in mind. This would mean a longer wait to recoup capital losses before making a return. Yes, SIPs can help by averaging your costs lower but they can begin to deliver returns only if the markets bounce back. The other problem with ELSS SIPs is that each instalment you pay is locked in for 3 years. You will be able to withdraw your entire money only after 6 years when every SIP completes the 3-year lock-in period. Yes, ELSS SIPs are a good instrument for tax savings and goals beyond 6-7 years. But, you should consider stopping your SIPs if you were not aware of these factors before commencing them. In future, if you don’t need tax benefits, avoid ELSS and invest in plain index funds.