Mutual funds are about more than just inflation beating; it is all about creating life-changing wealth over a period. The beauty of long-term investing and compounding can change small, regular dribbles of money into huge sums of wealth. SBI Long Term Equity Fund is a case in point, rewarding an incredible 37.5 times in 32 years, hence turning ₹10,000 of a monthly SIP into ₹14.5 crore.
Patience Pays: The Marathon of Wealth Creation
Investing is not a dash; it is a marathon. The real reward is the pleasure of being disciplined, patient, and committed. The SBI Long Term Equity Fund is a classic example: it proves that time in the market is much more important than timing the market.
SBI Long Term Equity Fund
Launched originally as the SBI Magnum Taxgain Scheme on March 31, 1993, it is among the oldest funds in India that qualify as Equity Linked Savings Schemes (ELSS). The fund started with the IDCW (dividend) option, but in 2007, it also offered a growth option allowing investors to reinvest their returns for further compounding benefits.
Besides handsome returns, this fund offers tax benefits under Section 80C with a 3-year lock-in period, encouraging the investor for long-term commitment.
How ₹10,000 a Month Became ₹14.5 Crore
Assuming an SIP of ₹10,000 a month started in 1993, the total investment in 32 years would be ₹38.4 lakh. With compounding, this amount would have grown to an incredible ₹14.44 crore, with a return of 37.5X.
The fund has given an annualized return (XIRR) of 17.94%, showcasing how life-changing an equity investment.
Returns Across Different Periods
Here’s how the SBI Long Term Equity Fund has performed over various horizons:
- Last 15 years: 16.03%
- Last 10 years: 17.59%
- Last 5 years: 24.31%
- Last 3 years: 23.42%
In comparison, its benchmark, the BSE 500 TRI, has given:
- 15 years: 14.30%
- 10 years: 15.14%
- 5 years: 17.17%
- 3 years: 13.89%
A Message for Long-Term Investors
DP Singh, Deputy Managing Director and Joint CEO of SBI Mutual Fund, again emphasizes that investors who fall under the old tax regime should take a holistic view of their investments. The golden opportunities exist in wealth creation via returns that beat inflation. SBI Long Term Equity Fund, in residence for the last 32 years, proves that investing patiently in quality funds can generate exceptional financial success.