Saving just Rs 120 per day opens the way to becoming a millionaire. This is not a fictional story, it is the true condition of investment made in a mutual fund scheme. We are talking about the returns of Life Insurance Corporation (LIC)’s Equity Linked Saving Scheme (ELSS).
Usually, when LIC is mentioned, insurance comes to mind. But apart from being a giant company in the insurance sector, LIC also runs many mutual fund schemes. The performance of many of its schemes has been excellent. One such scheme is LIC MF ELSS Tax Saver Fund. This is a 27-year-old scheme, which has provided great benefits to its investors since its launch, that too with tax savings.
Journey from saving Rs 120 to Rs 1 crore
IC MF ELSS Tax Saver Fund has given an annualized return of 13.05% to SIP investors in the last 27 years. That is, if someone had made a lump sum investment of just Rs 40,000 in this scheme 27 years ago and then started a monthly SIP of Rs 3,600 by saving Rs 120 per day, then the total value of his investment till now would have been Rs 1,00,03,281, i.e. more than Rs 1 crore. You can check the complete calculation here:
Scheme giving good returns for 27 years
LIC MF ELSS Tax Saver Fund has consistently given good returns on SIP investments since its launch. You can see here how much return this scheme has given on SIP in the last 3 years, 5 years, 10 years, 15 years and 20 years.
Features of tax saving scheme
As the name of this scheme suggests, LIC MF ELSS Tax Saver Fund is a tax saving scheme. This means that investing in it gives the benefit of tax savings along with returns. This means that investment up to Rs 1.5 lakh in a year is eligible for tax exemption under section 80C. If the units of equity funds are sold after holding them for more than a year, then there is no tax on the profit of up to Rs 1.25 lakh made during a financial year. If the profit is more than this, then long term capital gains tax has to be paid at the rate of 12.5%. Being a tax saving scheme, a lock in period of 3 years is applicable on investments made in LIC MF ELSS Tax Saver Fund.
As per the rules, it is mandatory to invest at least 80% of the corpus of an equity linked saving scheme in equity. However, the investment of this scheme in equity is much more than that. According to the latest data, currently 97.1% of this scheme is invested in equity and 2.87% in cash or cash-like assets.
Be careful before investing
Being an equity linked scheme, the investment made in this scheme is always subject to market risk. This means that the fluctuations in the stock market have a direct impact on it. Therefore, before making any decision about investing in it, properly check your risk taking capacity. Also keep in mind that the past returns of equity mutual funds cannot be considered a guarantee of similar performance in the future. Do not forget to consult your investment advisor before investing.
