Every time I see the hoisting of our national flag on Republic day, my heart is filled with pride and joy and I wonder why we don’t hoist the tricolor more often. The tricolor flying high in the air - it is the symbol of  a nation on the rise and also a strong reminder of how much freedom we enjoy as citizens living in the world's largest democracy.

And freedom of choice also brings with it responsibility - be it the government we vote for to something as simple as making the right choices with our money. Each one of us has a responsibility.

And it would be so nice if we could all pay our taxes with a smile, but unfortunately cash is required. And it is not easy to part with hard earned cash, is it? So today we'll help you take some smart tax saving decisions on a product which has over the years become quite popular with investors - ELSS or equity linked saving schemes. And come January there are ample new ELSS schemes floating in the market. So our big question today: Which ELSS should you buy?

First, what is an ELSS? And even before that, what is 80C?

# 80C is the section under which tax payers can invest upto Rs 1 lakh and save upto Rs 30,000 tax in a year

# If taxable income was Rs 5 lakh and you put away Rs 1 lakh, you will now pay tax on only Rs 4 lakh

# You can invest in more than10 products under 80C, like PF, PPF, life insurance, 5 year FDs and special mutual funds called ELSS.

So, what is this animal called ELSS?

# Equity Linked Saving Scheme

# Equity mutual fund

# Investments give 80C benefit

# 3 year lock in

# I like the ELSS product to use for tax saving since I can target a higher return through it.

# Some top funds have given more than 20 per cent return over a 5 year period

That understood, our clear advise is stick to ELSS which have a good track record. Why invest in a new ELSS scheme at all? And believe me you will be tempted with financial agents doing a hard sales pitch, but be smart and avoid.

Amongst existing schemes, we've got some clear winners for you to look at. Morningstar, one of the world's leading providers of independent investment research on mutual funds has benchmarked ELSS schemes with 5 year track record; the clear winner in the ELSS group emerges as Sundaram BNP Paribas Taxsaver. It is a 5 star rated fund from Morningstar. Look at its 1 year , 3 year and 5 year returns and these are per annum returns – 22 per cent per annum over 5 years! And what's extremely heartening about this fund is that it has outperformed the benchmark index both in a rising market and more importantly in a falling market. The losses have been well contained by the fund manager - when the benchmark index melted by 55 per cent, the fund is down only 46 per cent - this one we really like.

Let’s look at -  

# Over the past year, market is down 55 per cent but the scheme fell by less than 50 per cent

# Over a 3 year period, market lost 4 per cent, scheme lost less than that, 2 per cent

# Over a 5 year period, Franklin India gave 13 per cent while the market gave 7 per cent per year

# The scheme comes with a 5 star Morningstar rating

HDFC Tax Saver

It is a steady and conservative scheme, riding the downside but not giving supernormal returns when markets are rising.

# Over the past year, HDFC Tax Saver lost half its value, while the market lost a bit more than that

# Over 3 years, the scheme lost 5 per cent, while the market lost 4 per cent, so that is not so good

# But over a 5 year period, it gave 18 per cent return while the market gave 7 per cent return

# 4 star rated by Morningstar

Scheme: HDFC Tax Saver

# I year return: -50 per cent (When benchmark index fell by 55 per cent)

# 3 year return: -5 per cent (When benchmark index sheds 4 per cent)

# 5 year return: 18 per cent (When benchmark index returns 7 per cent)

It is 4 star rated from Morningstar, a steady scheme from a fund house known for long term approach to investing.

And the final ELSS which made our cut for recommendation is SBI Mangum Tax Gain Scheme. It is a High risk, high return scheme; 24 per cent per annum over 5 years. It is hugely outperforming in a rising market, but in a sliding market its fall has been equally rapid. So choose it if your risk appetite is high - this one is a 5 star rated fund from Morningstar.

Scheme: SBI Mangum Tax Gain Scheme

# I year return: -53 per cent (When benchmark index fell by 54 per cent)

# 3 year return: -2 per cent (When benchmark index sheds 1 per cent)

# 5 year return: 24 per cent (When benchmark index returns 8 per cent)

And with this, we hope we've done our bit is raising your tax quotient.

As we promised last week, we will look at some key new products in the market, read the fine print carefully and weigh out their pros and cons, to help you decide whether you should invest in them or not.

First product of the week - Tata Motors Deposit. It is a 3 year deposit which gives 11.46 per cent per annum compounded. And if you are a Tata Motors shareholder you get half a per cent more.

Now if you see the advertisement of this product, you'll see a 12.83 per cent return. Well, that is the simple interest you get. Even at 11.5 per cent, we like the product.

# It is a respected company

# The Group is well known for ethical business

And in today’s environment when promoter risk is one of the biggest risks, we get comfort from the 24 carat Tata name. The Promoter risk here we feel is very small. We are saying: You can BUY this. In fact we think it is a great investment option for NRIs and PIOs.

If you have a question for us, you can  post it on ndtvprofit.com. You need to click on the personal finance section and then click on the wealth show.

Also, many of you have written wonderful and encouraging words about the show and how useful you find it. A Big thank you, to all of you - your positive feedback is our biggest motivator! But also pull us up now and then and tell us how we can improve - that's the only way Monika will work harder. I already work very hard!

Good or not so good, we do put in our best. So keep watching, and we'll see you next week.