Equity mutual fund investors using systematic investment plans ( SIP ) as the primary tool to meet their long-term goals could face shortfalls after the introduction of a 10% long-term capital gains (LTCG) tax on such investments.Over the past couple of years, many financial planners and wealth managers were advocating investors to invest in SIPs to meet their long-term goals.Many investors started SIPs to meet their life goals — retirement, children's education, funding a vacation, buying a house or a car, or any other major capital expenditure. Until now, reaching these goals was considered by investors without factoring in the tax element. Contributions to these SIPs have doubled in a short period of time — from Rs 3,122 crore per month in April 2016 toRs 6,222 crore per month in December 2017. "Multiple things, including tax change, the fund going bad or markets not performing, could happen over five years. Investors need to step back and revisit their goals every six months to ensure they are on track," says Anup Bhaiya, MD, Money Honey Financial.

Source: Economic Times February 02, 2018 05:37 UTC