Skip to main content

Plan for Retirement Fund

Invest Mutual Funds Online

Download Mutual Fund Application Forms

 


Almost all of us work hard. So it is natural to expect a stress free retired life. For that, you need a large pension corpus. However, building one is an exhaustive process that should start as soon as one starts earning. It also needs a bit of planning and some discipline.


Building such a corpus is mostly aimed at replacement of income. That is, the amount of money you need soon after you stop working, and thus stop earning. A corpus using the mutual fund route could be a smooth job. But in case of a pension plan, a slight uncomforting part is that even after building a large corpus, there remains a continuing challenge in managing the same since one is never sure how long he/she would need to live off that corpus.


According to industry officials, a pension plan should have the right blend of debt and equity to give reasonable return. The fund manager should not take undue risks. He should come up with the provision to pay regular income after the investor retires. Flexibility of investments and liquidity in case of emergencies are some of the additional features that could make a pension plan more attractive for the self employed and those from the unorganized sector.


"Migration of children, the collapse of the joint family system, increased life expectancy, health expenses, increased cost of living & spending patterns, and insufficient funds to sustain living standards are some of the factors which should be considered while planning for a retirement corpus.


Looking at the current economic scenario and consistently high inflation, one must design investments in such a manner that they will fetch enough returns to overcome future inflation.


So while building a retirement plan, the approach should be to make it gradually more conservative as one grows older. This is done to reduce the risk closer to retirement. Consider the example where you had a fund that is invested mostly in equity, and which had given a return of, say 15% over a 20-year period, and your corpus from that fund was about Rs 1 crore. Now, if your date of retirement was, say May 20, 2004, then on May 17 — in one session — sensex crashes 11.1%. So in that one day, your corpus in the fund went down by Rs 11.1 lakh, and you would be left with about Rs 89 lakh — a huge set back!


Although equity funds can witness such falls only once in a while, such things never happen with debt funds. So as you near the retirement age, it's prudent to shift to debt from equity.


If you have invested through the mutual fund route, you should remember that fund schemes in India do not have an annuity option. So one can receive regular income by opting for a systematic withdrawal plan.


One of the safer approaches available in India is the public provident fund (PPF) scheme, which is guaranteed by the government, has substantial tax benefits and gives good annual returns. This is a 15-year scheme, can be extended by a block of five years, and is considered one of the safest bets for building a long term corpus.


Usually, investors go for systematic investment plans (SIPs) to achieve long-term financial goals. However, SIPs in debt funds could be used to achieve short-term goals as well. Next week, we will discuss this approach.

Dos and Don'ts Of Retirement Planning


Ø  The retirement corpus should make your later life tension-free. Spread your risks by proper asset allocation

Ø  Set investment goals,

Ø  confirm portfolio performance is on track. If not, rebalance

Ø  Be disciplined, make regular contributions, and don't divert from the plan

Ø  Increase your contribution to the retirement corpus every year

Ø  Take help from your financial planner or advisor regularly

We can help. Call 0 94 8300 8300 (India)

--------------------------------------------

Invest Mutual Funds Online

Transact Mutual Fund Online

 

Download Mutual Fund Application Forms from all AMCs

Download Mutual Fund Application Forms

 

Best Performing Mutual Funds

    1. Largecap Funds:
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    3. Mid and SmallCap Funds
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    4. Small and MicroCap Funds
      1. DSP BlackRock MicroCap Fund
    5. Sector Funds
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    6. Gold Mutual Funds
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

 

Popular posts from this blog

Group Health Insurance

Buy Group Health Insurance Online   For Human Resources, the biggest challenge today is to decide whether medical benefits should be offered to employees or not, what type of plans should be offered, what will be the cost and how will the cost be split between employees and employer. Well, most of these are subjective and would depend on a lot of factors including company size, average employee salary, etc. However, this article will give you a fair idea on how you should go about deciding these factors: 1. Why offer group health insurance benefit to employees : Studies have proved that retention rates among employers offering GHI are much higher than the ones who are not offering. Moreover, the cost of providing this benefit as a percentage of salary is very low as compared to the perceived value. As an example, say if average salary of an employee in your organization is 4 LPA. If you decide to offer a health insurance benefit to him for a Sum insured of ...
Read more

Choose gold ETF over Physical Gold

Investing in gold is overall a good portfolio hedging strategy as long as gold does not account for more than 5-10 per cent of your investment portfolio. Between physical gold and gold ETF, investing in gold ETF is a better proposition because these funds invest in physical gold making them the closest to investing in physical gold at no risk of holding physical gold.   You will need to have a demat account to invest in gold ETFs and there is little to choose between any of the gold ETFs, you can pick any fund that you wish to as long as you pick the fund with the lowest expense ratio.   -----------------------------------------------------------------   Also, know how to buy mutual funds online:   1) DSP BlackRock Mutual Funds: http://prajnacapital.blogspot.com/2011/05/buying-dsp-blackrock-mutual-funds.html   2) Reliance Mutual Funds: http://prajnacapital.blogspot.com/2011/06/buying-reliance-mutual-funds-online.html   3) Reliance Mutual Funds: http://prajnacapital....
Read more

Why credit history is critical?

Will you need a loan to buy a car or a house? Do you know why some people get their loans sanctioned quickly without any hassle, whereas others find that their approval is delayed or their application is rejected? If you want a loan, you will need to work to build a solid credit history because this can have a bearing on the ease with which you get loans. Read on to learn more about what is a credit history and how to build a good credit score. What is a credit history? Your credit history is a way of tracking your credit behaviour and habits — basically it shows how disciplined and regular you are when it comes to repaying your dues on loans that you have taken. It will show a complete record of your past borrowing and repayment record including details about any late payments or if you have defaulted on a loan. This track record is readily accessible to lenders and is used by them to when reviewing your loan application. Borrowers who have historically had a bad record of managing...
Read more

JM Financial Mutual Fund - Its Schemes

  JM Financial Mutual Fund is a part of JM Financial Group which is one of the first mutual fund companies in India which started its operation in 1993-1994. JM Financial Asset Management Limited is sponsored by JM Financial group. The mission of the group company is to generate good returns in all the product categories. JM Financial Mutual Fund has launched a variety of schemes in the following categories. ·                            Equity ·                            Debt ·                            Arbitrage ·                            Liquid Equity Schemes: The schemes that are launched in the equity category are: ·                            JM Midcap Fund ·                            JM Balanced Fund ·                            JM Agri and Infra Fund ·                            JM Basic Fund ·                            JM Contra Fund ·                            JM Contra Fund ·                            JM Emerging Leaders Fund ·             ...
Read more

Birla Sun Life MIP II Savings 5

  Birla Sun Life MIP II Savings 5 - Invest Online   Have you traditionally been a debt investor but now wish to test waters in equities? Then, debt-oriented funds such as Birla Sun Life MIP II Savings 5 (Birla Savings 5), which have limited exposure to equities, may fit your requirement. With a five year return of 10.5 per cent compounded annually, the fund managed a good 3-3.5 percentage points more than its benchmark Crisil MIP Blended Index, as well as its category average. The fund appears well poised to capitalise on a falling interest rate scenario and has increased the average portfolio duration of its debt instruments in recent times. Suitability Birla Savings 5 is suitable only for conservative investors. If you want to make a beginning in equities and cannot take any short-term declines in your stride, then this fund will suit you. If you are already an equity investor and want to use a debt-oriented fund merely as a diversifier, then you may prefer peers from the HDFC and Re...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now