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How to plan your retirement with mutual funds

Sooner or later in life we all think of what after retirement. Though in the youthful years of working, we might take it lightly, but circumstances of life do put across the question in front of us and get us worried. Definitely, our lifestyles now need a secure tomorrow when the flow of income will see a gradual slowdown and the rising inflation might make it tough to match our expenses then. Certainly, planning your retirement is a really important financial goal. And to make it to that goal you can plan your retirement with mutual funds.

To further move ahead on your retirement planning with mutual funds, it is essential that you as an investo​r have an overview on how retirement planning works. It all begins with investing funds in the initial stages since then you are young, have little liabilities and more risk taking ability. Gradually it gets to maintaining the funds and finally getting the payout and withdrawal option when you need it the most. Mutual Funds​, as well follow the same path when aimed at retirement plans.

But, in order to plan your retirement with mutual funds, you need to understand the type of funds that are available, so you can choose them basis your requirement, risk appetite, term of investment etc. Some of the mutual fund types best suited for retirement are:

Diversified Equity Funds
Investing into varied kinds of equity funds​ makes this scheme aggressive. It has potential to get you high returns, but is quite risky as well. Equities perform well in the long run and make a good investment fund if you begin investing at a young age.

Thematic/Sector Funds
These funds get more specific with the sector you want to invest in and also go high on risk. Suitable for aggressive investor, there’s option of mid-cap, small and very small cap stocks. These funds are sensitive to economic parameters and each year there’s a new leader in performance.

Asset Allocation Funds
A fund that spreads its portfolio among a wide variety of investments, including domestic and foreign stocks and bonds, government securities, gold bullion and real estate stocks. Some of these funds keep the proportions allocated between different sectors relatively constant, while others alter the mix as market conditions change.

Systematic Investment Plans
If you are good with investing in equities but need a more systematic and controlled approach, Systematic Investment Plans (SIP) plans are best way to go about it. This keeps the volatility at bay and continues investing regularly a fixed amount, on a predefined date of every month. So when the market falls, you get more units at a lower price and when the market rises, the value of your investment goes up.

ELSS Funds
This is the most favorable scheme for both your long term investments and tax savings. These too offer diversified equity funds but have lock-in period of only three years and are eligible for tax deductions as well. So both the dividends and the capital gains come tax-free under section 80C. Also being equity linked these tend to bring better returns with the benefit of tax savings.

The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. Certain factual and statistical information (historical as well as projected) pertaining to Industry and markets have been obtained from independent third-party sources, which are deemed to be reliable. It may be noted that since RNLAM has not independently verified the accuracy or authenticity of such information or data, or for that matter the reasonableness of the assumptions upon which such data and information has been processed or arrived at; RNLAM does not in any manner assures the accuracy or authenticity of such data and information. Some of the statements & assertions contained in these materials may reflect RNL​AM’s views or opinions, which in turn may have been formed on the basis of such data or information.

Before making any investments, the readers are advised to seek independent professional advice, verify the contents in order to arrive at an informed investment decision. None of the Sponsor, the Investment Manager, the Trustee, their respective directors, employees, affiliates or representatives shall be liable in any way for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including on account of lost profits arising from the information contained in this material.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

Mutual fund investments are subject to market risks, Read all scheme related documents carefully.

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