I had invested in Magnum Tax Gain during 2007 as SIP for 1 year. Now, the lock-in period is over. Should I redeem or reinvest? Any other similar good scheme for Rs 2000-Rs 3000 per month that I can SIP in?
-Amita V. Dutta
Your decision to invest systematically and regularly in a tax saving fund is good. Not only do investments in these funds help you save tax, it also helps you build a corpus, gains on which are tax free. However, selecting a good fund is the key. Magnum tax gain has not fared as well in the period of your holding and has under performed the benchmark it tracks.
You can draw an important lesson from this investment experience that fund selection is crucial and it can be the one factor that can be the road to wealth creation or erosion. When investing in a fund; look for its consistent past performance and how it has managed to fare over the long run in both bull and bear markets. As the mandatory lock-in period is over, you are free to redeem the investment and consider investing the redeemed sum into another tax saver to get the necessary tax advantage with the investment. DSPBR Tax Saver, Fidelity Tax Advantage and Religare Tax Plan are 5 star rated tax plans that you can consider investing through an SIP.