Retirement planning through Mutual Funds - Super Multibaggers

Retirement planning through Mutual Funds

A middle class person who have recently got a job and started working in open world has some traditional pressures to save money for his brighter future and its no secret that here the future means ‘older age’ when they would have limited source of Income.

On the other hand a person from well off family generally avoids thinking about future on the back of wealth created by their parents or any ancestral boon expected to turn good for them.

That means the ultimate objective for a middle class person is to save money and create wealth for his future life and children. Future life here means the life after retirement when people does not have any source of income and since there is no facility like European countries provided by our government to the retired people, they have to rely on the return coming from the Investment done by them during their working time.

Now the question comes that whether the money saved by them is enough to fulfill their desires? The Answer is always ‘No’, because whatever money we have with us could never be enough. The only thing which we can do is to try as much as we can and isn’t it better if the money saved by you multiply itself. This is possible if you Invest in Mutual Funds for Retirement planning.

Retirement planning through Mutual Funds

We should now discuss that what we need to do with our money so that it becomes independent earner for you and generate handsome returns for taking care of your life in old age. We have different investment options wherein investors can get a reasonable return and create a good wealth over a period of time. Most of the people look for options that could support their medical needs, daily requirements, and financial security. Senior citizen savings schemes, insurance policies, pension plans, bank fixed deposits, etc., are several options that can assure you a satisfying retirement. Mutual funds are the best of these investment option as it provides a flexibility to the investors along with the highest possible return.

Further Mutual funds also provides liquidity which is not there in the investment like real estate.

Like any other Investment, returns depends on the fund invested and the first stage is to create a corpus of fund which should satisfy the needs of your retirement age. The Fund can be accumulated by small monthly savings, Systematic Investment options etc. If you invest a small amount of money over a long period of time with discipline, you can create a enough fund to live a good life even after the retirement. The compounded returns of mutual funds make you happy when you watch your money grow in multiples.

Mutual funds are categorised under five broad categories, out of which equity, debt, and hybrid are the major ones. They offer retirement plans under their solution-oriented funds, as per the SEBI’s new categorisation rule.

Systematic Withdrawal Plan (SWP)

After retirement people may opt for a Systematic Withdrawal Plan. Wherein a retiree will get a monthly income like salary from the total fund created by them. In such a case, the newly launched solution-oriented mutual funds provide enough liquidity with the shortest lock-in period of 5 years. In addition to the above advantage, such mutual funds provide tax benefits too.

For example if you have created a fund of 20 lac rupees you may choose the period of withdrawal, frequency of withdrawal and amount of withdrawal at your ease and the remaining amount would continue to generate return until it remains invested.

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How to choose Mutual Funds

Pick the underlying investment based on your needs

You have to decide that in sector you want to invest. For example, if your age is 25 and you have risk taking ability, you may opt for a Mutual Fund in equity and that too in small and mid cap areas. However, if you are little reluctant in taking risk you may go for the equity large cap. If the investment is for a particular purpose and don’t have risk appetite that Investor may opt for a debt or hybrid fund. You might be aware that the nature’s principal is more risk more reward, less risk less reward.

Portfolio of Fund

You have to check in which sector the fund is deploying most of its money and what is the outlook of that particular industry. If the fund is biased towards one particular industry despite of having low of negative return, always avoid that fund as there is no scope for any emotional attachment in investment. The second thing here is the Fund which you are choosing should be flexible enough to shift its portfolio according to market trend and having good standing of the external and internal environment.

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Consider mutual funds’ past performance

The first check to choose a Mutual fund is to check the past performance of a particular fund to understand the growth which may expect during te period of your investment. Though past performance never gives a guarantee for future performance but still you may have some expectations based on it and expectations are the essence of any investment.

Management of the Fund

You have to check the quality of the management who is handling the fund it would be better if you can compare few of the schemes handled by that Fund Manager. It gives you an idea that in who’s hand you are giving your money and how much risk is involved.


Lock in period and fund charges

Investors should also check the lock in period if there is any, in the Fund as it dampens the liquidity and also the fund charges which effects your return. Investors should carefully read the necessary information about the fund before investing.


Dear all

If you find this Article helpful, kindly let me know by commenting or if you need any other information about investing in Mutual Funds, you may kindly let us know. The information shared herein is just for education purpose and does not intent to instigate anyone for investing in the Mutual Funds or any other investment options.

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