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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 investor 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.

Systematic Investment Plans
starting an Systematic Investment Plans (SIP)​ at an early stage in your life with an objective of retirement planning can be the first step towards planning your retirement. Through SIP you can regularly invest a fixed amount at periodical intervals and aim for better benefits over a period of time through power of compounding. But, in order to plan your retirement with mutual funds, you need to understand the type of funds that are available, which can choose 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.

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.




SIP stands for Systematic Investment Plan wherein you can regularly invest a fixed amount at periodical intervals and aim for better benefits over a period of time through power of compounding.

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. The document has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. The sponsor, the Investment Manager, the Trustee or any of their directors, employees, affiliates or representatives (“entities & their affiliates”) do not assume any responsibility for, or warrant the accuracy, completeness, adequacy and reliability of such information. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independents professional advice in order to arrive at an informed investment decision. Entities & their affiliates including persons involved in the preparation or issuance of this material shall not 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. Recipient alone shall be fully responsible for any decision taken on the basis of this document.

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


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