Most people don’t think about retirement until they reach a certain age. While it is true that planning for retirement early in life gives you a lot of time to save enough for a worry-free tomorrow, it does not mean it is too late to start thinking about it now.
Planning for your retirement is crucial. Think of it as a demand-supply chain. The demands would include necessities, higher medical expenses due to old age, personal expenditures, etc. The supply, however, would not include the monthly source of income that you have now. You will have to depend on your family/children, which can hamper your financial independence. Therefore, you need to balance this out by securing your retirement with the right investments today.
If you start planning for your retirement now, your future self will be stress-free. Let us understand where you can begin your retirement investment plan.
How to begin your retirement planning?
The first step toward retirement planning is identifying your goals. Keep in mind that the money you need in the future will always be more than the money you need now due to inflation. Be it needs or wants, prices keep skyrocketing each day, and they will only increase. So, the first step would be to calculate the amount of money you might need in the future to attain your objectives. You can then start researching where you can invest to maximise the gains. A great investment option would be retirement mutual funds. People often turn to retirement mutual funds with the growing popularity of saving for retirement.
You can start investing in retirement mutual funds when you have a few years in hand before retirement. You can do this by investing a lump-sum amount or going for a Systematic Investment Plan (SIP). SIPs are an easy way to begin your investment if you have some amount to spare every month. You can use the SIP return calculator to see if the returns you might get are close to the amount you need and calculate your SIPs (or lump-sum investments if that is your mode of investment) accordingly. You can select the right retirement mutual fund through research or seek a fund manager’s advice to decide the amount you want to invest. The SIP amount will be deducted automatically from your account on a fixed date every month.
It is pertinent to note that while investing in mutual funds, time plays a crucial factor. The earlier you start investing, the more likely you are to benefit from the power of compounding. Hence, it is always advisable to start investing early on in your life. You can even use the power of compounding calculator to check the returns you may get from your investments.
If you are planning to invest in a retirement mutual fund, you can also use a retirement calculator to determine your returns for the amount you want to invest. According to the goals you have set for yourself in the future, identify the amount you will need. It is also important to note that retirement funds are not the only option. You can also choose to invest in equity funds and other mutual funds. Ultimately, your risk appetite and time horizon will determine which type of mutual fund works for you.
If you are risk-averse, you might want to invest more in debt or hybrid funds. If your risk appetite is high, equity funds may be the right option. Before investing, conduct research to understand which fund will help you meet your goals. Once you have decided, you can get started with the formalities online or offline.
Wrapping up
If you have not started planning for retirement yet, you can begin any time. Ideally, you may want to focus on complete financial independence without compromising your future. Diversify and maximise your gains with the proper planning today and enjoy retirement to the fullest.
FAQs
Are mutual funds safe for retirement?
Mutual funds are of many types. Some invest in equity, while others invest in debt. While all mutual funds are subject to market risks, the risk varies according to the type of mutual funds. You can choose to invest in a mutual fund basis your risk appetite and retirement goals.
How does a retirement fund work?
Retirement funds require regular investment until retirement. Once you retire, you can opt for a monthly payout option to help you manage your expenses.
How much should I save for retirement?
The amount of money needed in retirement depends on your background, lifestyle, and financial strength.
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, associates or representatives (“entities & their associates”) 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 independent professional advice in order to arrive at an informed investment decision. Entities & their associates 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.
The above-mentioned calculator results are based on an assumed rate of return. Please get in touch with your professional advisor for a detailed suggestion. The results are based on an assumed rate of return. The calculations are not based on any judgments of the future return of the debt and equity markets / sectors or of any individual security and should not be construed as promise on minimum returns and/or safeguard of capital. While utmost care has been exercised while preparing the calculator, NIMF does not warrant the completeness or guarantee that the achieved computations are flawless and/or accurate and disclaims all liabilities, losses and damages arising out of the use or in respect of anything done in reliance of the calculator. The examples do not purport to represent the performance of any security or investments. In view of individual nature of tax consequences, each investor is advised to consult his/ her own professional tax/ financial advisor before taking any investment decision.
Mutual Fund Investments are subject to market risks, read all the scheme related documents carefully.
