Is SBI ELSS Fund a Good Option for First-Time Investors?
Investors who are looking for tax benefits under section 80C of the Income Tax Act have been long exploring Equity linked savings schemes (ELSS mutual funds) as their favorite choice. With a lock-in period of three years, these funds not only reduce taxable income but also give an opportunity to create wealth. ELSS is a dual advantage for first time investors because it promises both disciplined long term investment as well as tax efficiency. SBI Mutual Fund’s ELSS offerings come to the fore among the other prominent players in this space for their legacy and performance.
Why SBI Mutual Fund Stands Out?
India’s oldest as well as one of the most trusted AMCs, SBI Mutual Fund was set up in 1987. It is a product of the State Bank of India’s credibility and Amundi’s global expertise, with assets under management of over ₹4.49 lakh crore (as of February 2023). India’s first Contra Fund and ESG focused fund are innovative products, developed by the fund house which have been focused on various investment strategies. It instills confidence in the track record for newcomers because stability and experience are important when it comes to market volatility.
SBI ELSS Fund: Key Features for New Investors
The SBI Long Term Equity Fund is an ELSS option that is a good option for the long term financial goals. The fund is managed by seasoned professionals that invest their money across market capitals of that balance growth and stability. One of the nice things about its three-year lock-in period is it forces people to act for the long term, and avoid the temptation to dump stocks by making impulsive decisions. Also, the lack of an exit load after lock-in is flexible. Historically, the fund has been able to deliver competitive returns, benchmarked against the NIFTY 500, and is a reliable contender in the category of ELSS.
Benefits of Choosing ELSS for Tax Planning
When it comes to balancing tax saving and wealth creation, first time investors often get into a churn. SBI’s offering of ELSS mutual funds covers both the needs. The tax deductions up to ₹1.5 lakh can be claimed against investments and as equity exposure, there is a higher potential for returns vis-à-vis PPF or FDs. The shorter lock-in period (compared to PPF’s 15 years) also appeals to those seeking liquidity after the mandatory tenure.
Risks and Considerations for New Investors
The fact is that ELSS funds are not absolutely free from risk. Returns from equity markets aren’t guaranteed and can be volatile. Before committing, first time investors have to take into consideration their risk appetite and their financial goals. While SBI Mutual Fund’s ELSS is prudently managed; it is not different. Diversification across sectors and market caps within the fund mitigates some risk, but newcomers should pair ELSS with other debt instruments or emergency funds to create a balanced portfolio.
How to Start Investing in SBI ELSS Fund?
Investing in SBI’s ELSS fund is streamlined through digital platforms. KYC is completed with PAN card, address proof, bank details after which investors can choose Lump sum or SIP mode. SIPs are a good way for someone with limited capital to invest small amounts regularly. Past performance of the fund, expense ratio and sectoral allocation can be analyzed to make informed decisions.
Final Thoughts: Is SBI ELSS Right for You?
SBI ELSS mutual funds serve first time investors well with a great combination of tax saving, equity growth potential and the like of a reputed fund house. There are risks in the market but the structured lock-in period exerts discipline and the discipline of patience is the essential attribute for wealth creation. Newcomers can take advantage of the expertise of the SBI to build a strong base to financial further through aligning the investments with long term goals and maintaining a diversified portfolio.
