I’ve been investing Rs 3,000 in the SBI Magnum Tax Gain – Dividend plan for the last 4 years. I want to convert this dividend plan to the growth plan. Is this a good option?
It’s a good idea, but you may not be able to do it for all the investments that you’ve done over the past 3 years, because when you invest in a tax-saving fund, your money is locked in for 3 years. The change of plan, from dividend to growth, is considered as a fresh financial transaction. Effectively what happens is that you redeem your investments in the dividend plan and make a new investment in the growth plan. And because there is a 3-year mandatory lock-in, you can't do that. So all you can do now is make new investments in the growth plan, and move your existing units to the growth plan as and when the lock-in expires on them.