How to structure your retirement with mutual funds?

Every financial plan is based on certain assumptions. A basic assumption for a retirement portfolio is 'life expectancy' where you assume to live up to a certain age and all the investments are planned around that assumption.

So, how can you have the retirement you’ve always wanted?

How much to save and invest?

Let us assume you need Rs 2.7 Crores for retirement and you have 10 years left for your retirement goal. Assuming you get 8% return on your savings, you need to save nearly Rs 1.5 lakhs per month just to meet your retirement goal. For many investors, it may seem a daunting task because you may have other financial obligations like home loan EMIs, children’s education, saving for children’s marriage etc. While the task is daunting, it is quite achievable if you have a good financial plan in place and start saving for retirement early in your careers. Mutual funds may help you meet your retirement planning goals, while fulfilling your other aspirations at the same time.

Return on investment is one of the most important attributes of wealth creation. Mutual funds help you get exposure to different asset classes and sub-classes, which may enable you to get superior returns. Equity mutual funds have been the best performing asset class in the long term and have the potential to create wealth for investors over a long investment horizon.

Mutual fund systematic investment plan (SIP) is one of the best ways to invest for retirement planning. Through SIP, you can invest in a mutual fund scheme of your choice, based on your investment needs and risk appetite, from your regular monthly savings through auto-debit from your savings bank account. SIP can be a disciplined way of investing because it will make you control your spending habits and invest regularly. SIPs in equity mutual fund schemes also average the cost of your purchase (Rupee Cost Averaging) by taking advantage of stock market volatility.

You can start your SIPs with very small monthly (or any other intervals) investments, as low as Rs 1,000. The longer your SIP tenure, the more wealth you may create through the the power of compounding. 

While many of you will be tempted to opt for a pension plan instead of mutual funds for your post-retirement financial requirements, but the fact remains that mutual funds are a safer and a better option. 

Emergency savings are a vital component of retirement planning, and liquid mutual funds are a suitable instrument for them. You can park your funds in a liquid fund as they invest your money in money market instruments for only 91 days. Being true to their name, they are highly liquid too. You can redeem your funds within 24 hours. Moreover, they ensure that your money does not sit idle but grows in value.

Using mutual funds for retirement planning can offer your financial security in your old age. It can ensure that you stay financially independent and live a comfortable life. Mutual funds also offer tax saving solutions that further strengthen your earnings. Moreover, with easy options like SIPs, they provide you with a simplified route to investment. So, you do not feel financially burdened and can continue investing for a long time without compromising on present goals. 

Start your retirement planning with us today! 

*Mutual Fund Investments are subject to market risk, read all scheme related documents carefully.

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