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

What are the factors affect the changes in Interest Rate of Fixed Deposits?

  What are the factors affect the changes in rate of Fixed Deposits? Fixed Deposits are now considered to be a very old fashioned method of saving, but still attract many investors since they have guaranteed returns at the end of the tenure of the investment at a decent interest rate. There are various factors that affect the rates of interest for a Fixed Deposit. Policies of the Reserve Bank of India   - The several norms and restrictions posed by the Reserve Bank of India , in order to gain optimum control over credit and inflow and outflow of fund throughout the country. The repo rate changes, cash reserve ration tends to change and these changes affect the banking products like Fixed Deposits, loans etc. Recession   - When unemployment in a country crosses the benchmark set Recession hits, and slowly the country faces an economic slow movement, affecting the purchasing power of the people in the country, forcing the Reserve Bank of India to release more funds in the financial marke...
Read more

Capital Protection Oriented Funds

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Capital Protection Oriented Funds   Erosion of capital is one of the key concerns for investors wanting to invest in equity mutual funds. To address this concern, asset management companies have launched Capital Protection Oriented Funds (CPOFs). What are CPOFs? CPOFs are generally three to five-year, closed-ended funds where 70-80% of the portfolio is invested in fixed income securities, which mature on or before the scheme's tenure. The investment in fixed income securities grows to 100% at the end of the tenure, providing the investor with capital protection. The remaining portion (20-30%) is used to take exposure to equity, which provides the upside. Exposure to equities is either by directly buying equity stocks (plain vanilla CPOFs) or by b...
Read more

Understanding Your Cibil Credit Information Report

   WE ARE all familiar with the anxiety and uncertainty that we feel when applying for a loan. After all, it's the lender who decides whether we can own our dream home, our first car, or whether our children can pursue higher education. In a nutshell, a better life depends on the lender's decisions.    While other factors do play a part in the lender's decision, the Cibil Credit Information Report ( CIR ) plays a crucial role in a lender's decision to approve a loan application.    Previously, lenders would treat all loan seekers equally. Each applicant, if approved by the lender's internal credit policy, would be charged at the same interest rate for a particular loan size and purpose. The lenders would charge a higher interest rate to all the borrowers, in order to compensate for the possible default of a small portion of the loan disbursed. In other words, it's like a professor (the lender) punishing an entire class (borrowers) for the mischief played b...
Read more

Good Loan

Why Is It A Good Loan?: Loans against gold are cheaper and better than personal loans as the former are available at lower interest rates. In contrast, the interest rates on personal loans are not standardised and can vary from bank to bank. Also, a personal loan depends on a host of factors including, the borrower's salary, profession and the purpose for which the loan is being taken.      For instance, the interest rate on a personal loan of 5 lakh falls in a wide range of 15-30%. But loans against gold are available for as low as 11%. Secured borrowing such as a loan against gold, investments or property is cheaper because it is backed by some assets, which command a good value at any point of time. If the borrower defaults on the loan, the banks can liquidate the assets to settle the loan account.    Being a secured loan, the risk of default and credit losses is significantly lower in this loan compared to other forms of loan for personal use. Given the lower risk, gold loa...
Read more

Mutual Fund Review: ING Dividend Yield

  ING Dividend Yield's small assets enable the fund manager to churn in impressive returns… Strategy The aim of the fund is to invest in stocks which offer a high dividend yield. This fund deploys a value based strategy which aims to gain from investing in fundamentally strong and free cash flow generating businesses. The scheme focuses not only on growth but also on the cash generated by the business, which mostly leads to stable returns even in volatile markets. This fund has a low volatility because of its investment in high yielding stocks. The scheme tries to include stocks that yield dividend above the dividend yield of the Nifty and stocks with liquidity, which throws up a universe of 150 stocks.   Our View Launched in October 2005, this fund invests at least 65 per cent of its assets in high dividend yield stocks. The fund has consistently maintained a mix of stocks across varying market capitalisation, with a higher tilt to mid caps compared to small caps. Howev...
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