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Retirement Planning via mutual funds

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With growing financial liabilities and age, one needs to gradually cut exposure towards equity and shift the wealth towards debt instruments

HAVE you been saving for retirement without a clear idea of how much money you'll need to live on? If so, estimating your retirement income should be an essential part of your saving strategy. Most retirees want to maintain their standard of living during retirement. To accomplish this, financial experts say you'll need between 70 and 80 per cent of your pre-retirement income. In addition, you also need to take into consideration how long you might live. People are generally in better health and living longer, more active lives than ever before.

Many of our parents and their parents never faced the question of how to invest their retirement savings. Dad and/or mom might have had a secure pension, so they probably didn't have much to worry about their retirement savings. But pensions are fading away. Today's generation are among the first to be forced not only to decide how much money to put away but also where to invest it.

For a long time, retirement planning meant investing in small saving schemes, like public provident fund (PPF), national saving certificate scheme (NSC) and employee provident fund (EPF). Some also bought traditional insurance policies. However, the problem was that these seldom beat inflation. Asking for best investment options for retirement planning has become a very common question these days. It's a question that has foxed financial planners forever -how to beat inflation and generate the desired wealth over long periods for retirement. Inflation, we know, can upset calculations by eroding the value of savings. At 5 per cent inflation, an expense of Rs 10,000 will become Rs 40,000 in 30 years. For a person saving for retirement, generating returns that can beat inflation seems difficult. It's not, provided he invests wisely in mutual funds.

Equity investments have Equity investments have always returned better over a long period. Since it is difficult for lay investors to pick individual stocks, it is better to invest through diversified equity mutual funds via systematic investment plan (SIP). In this way, one can invest a small amount every month for the retirement corpus. If one doesn't have any significant financial liability, he/she can take high equity exposure to maximise returns. With growing financial liabilities and age, one needs to gradually cut exposure towards equity and shift the wealth towards debt instruments. One can always increase his/her contribution towards retirement fund whenever there is a rise in the salary. This will help build a bigger corpus. Then the same corpus can be invested in post office monthly income scheme, mutual funds' monthly income plan (Here monthly income is not assured and is subject to availability of distributable surplus), insurance products offering immediate annuity and other fixed deposits to ensure a steady flow of income after retirement.

Mutual fund offer many variants of products that may serve the purpose of every individual depending on his investment horizon and risk-taking ability.


While equity funds help in capital appreciation, debt funds aims to provide regular income. Similarly, gold funds help di versify the portfolio and act as a cushion when equity as a cushion when equity markets fall. Depending on the risk appetite one has, he/she can opt for low-risk liquid funds, or aggressive sectoral equity funds. There are hybrid funds as well that invest in both equity and debt instruments and provide the right balance to the portfolio. So one can diversify his/her retirement portfolio by investing in equity as well as debt funds. It is widely regarded that the ideal allocation percentage towards equity is 100 minus the investor's age. So, at 25 years of age, one may invest 75 per cent of the funds in equity, but when he/she turns 50, the equity allocation must not exceed 50 per cent.


When one is four to five When one is four to five years away from retirement, it would be better to shift a major portion of the corpus from equity to debt.

Of course, there is no cookie-cutter formula for retirement investing. A slow and steady investor will usually beat everyone.

Globally, mutual funds have been highly successful in creating long-term wealth.


In fact, countries like the US have defined contribution retirement plans such as the 401K (equivalent of the EPF in India) that hold a large party of assets in mutual funds, especially equity funds.

Happy Investing!!

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Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

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These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. ICICI Prudential Tax PlanInvest Online
  2. HDFC TaxSaverInvest Online
  3. DSP BlackRock Tax Saver FundInvest Online
  4. Reliance Tax Saver (ELSS) FundInvest Online
  5. Birla Sun Life Tax Relief '96 Invest Online
  6. IDFC Tax Advantage (ELSS) FundInvest Online
  7. SBI Magnum Tax Gain Scheme 1993Invest Online
  8. Sundaram Tax SaverInvest Online
  9. Edelweiss ELSS Invest Online

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Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      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 Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver MutualFundsInvest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

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