When looking for ways to save tax and grow wealth in the long term, many investors turn to mutual funds. One such plan, the SBI Long Term Equity Fund, offers both potential for high returns and tax-saving benefits. This fund, formerly known as the SBI Magnum Taxgain Scheme, has been around for over 20 years and has proven itself as one of the top-performing Equity Linked Savings Schemes (ELSS).
This mutual fund plan is specifically designed for investors looking for long-term growth with the added advantage of tax exemption under Section 80C of the Income Tax Act. Whether you invest a lump sum or through a systematic investment plan (SIP), this scheme has delivered excellent returns over the years.
Investment Growth Over 5 and 20 Years: Impressive Results
Investors are always keen to know how much their money can grow. The performance of SBI Long Term Equity Fund over the past 5 and 20 years is impressive, showing significant growth that can’t be ignored.
5-Year Growth: Doubled Investments
- Lump sum investment: ₹1,00,000
- Monthly SIP: ₹5,000
- Total investment (in 5 years): ₹4,00,000
- Returns (annualized): 30.57%
- Value after 5 years: ₹10,14,996
The fund doubled investments over the last 5 years, making it an attractive choice for investors looking to grow wealth within a short time frame.
20-Year Growth: 40x Return on Investment
For those with the patience to invest over a longer period, the SBI Long Term Equity Fund has delivered staggering results.
- Lump sum investment: ₹1,00,000
- Investment period: 20 years
- Annualized return (CAGR): 20.21%
- Fund value after 20 years: ₹39,70,196
The fund multiplied the initial investment nearly 40 times in 20 years, demonstrating its long-term wealth-creation potential.
Tax Benefits of SBI Long-Term Equity Fund
One of the major attractions of this scheme is the tax savings. By investing in SBI Long Term Equity Fund, you can claim deductions up to ₹1.5 lakh under Section 80C, helping you save taxes up to ₹46,800 annually if you fall in the highest tax slab.
Additionally, the fund requires a 3-year lock-in period, after which you can withdraw your investment. This lock-in period is shorter compared to other tax-saving instruments like Public Provident Fund (PPF), which has a 15-year lock-in.
Who Should Invest in This Scheme?
This scheme is ideal for investors with a long-term investment horizon and those willing to take on high risks. Since the fund invests in equities, the risk level is classified as “very high.” Therefore, investors should assess their risk tolerance before committing to this plan.
Although the lock-in period is only 3 years, it is recommended to stay invested for at least 5 years or more to see significant returns.
Those looking for tax-saving investments along with the potential for capital appreciation should consider the SBI Long-Term Equity Fund. It is particularly suited for individuals with financial goals like children’s education, retirement planning, or other long-term objectives.
How to Invest: Lump Sum or SIP
The SBI Long Term Equity Fund offers flexibility in investment methods. You can invest a lump sum amount or start a Systematic Investment Plan (SIP) with as little as ₹500 per month. SIPs help reduce market risks by averaging out the cost of investment over time.
Key Details of SBI Long-Term Equity Fund:
- Scheme Name: SBI Long Term Equity Fund – Regular Plan
- Fund Manager: Dinesh Balachandran
- Expense Ratio: 1.59% (Regular Plan), 0.93% (Direct Plan)
- Risk Level: Very High
- Lock-in Period: 3 Years
- Sector Exposure: Financial services, Oil & Gas, Capital Goods, IT
Top Holdings of the Fund:
- HDFC Bank: 4.47%
- GE T&D India: 3.7%
- Reliance Industries (RIL): 3.44%
- Mahindra & Mahindra (M&M): 3.42%
- ICICI Bank: 3.26%
