With the rise in economic uncertainty, the need for retirement planning has dawned on a large section of the Indian people, and the number who are planning from an early age is growing. One of the instruments that one can consider for retirement planning is investing in a special category of mutual funds called retirement funds which are designed to provide regular income after an investor attains the age of 55 or 60.
The investor continues to earn a pension all his/her life and after his passing away, the funds go to the nominee.
Solution-oriented mutual funds
AMFI categorises these as solution-oriented mutual funds.
Since minimising risk is one of priorities of any fund providing pension, they usually invest in debt instruments like government securities, corporate bonds and money market instruments. Some funds also put their money in blue chip equity stocks.
Retirement funds also carry a lock-in period. For some, the lock-in can be even longer, which makes them a bit illiquid.
SIP as well as lump sum
Like all other mutual funds, one can invest in retirement funds through the SIP and lumpsum mode.
Retirement plans offer the investor the option of being paid in monthly pension or lump sum at one go. The monthly annuity can be at a fixed rate or they can be linked to inflation.
Therefore, anyone who needs smooth flow of funds after retiring from work can invest in retirement mutual funds.
Who could invest
Any Indian citizen can invest in retirement funds. But since these are special category funds, mostly those who are conscious of planning for post-retirement years and think they might need a steady income in the golden years.
Significantly, investors in early twenties or thirties can select retirement funds to put a section of the portfolio. These funds usually offer better returns than bank FDs.
One can also use a retirement calculator to get an indication of the type of investment one needs to make in order to get a desired level of income in future.
Some popular funds
Some of the popular retirement funds in India are HDFC Retirement Savings Fund, ICICI Prudential Retirement Fund, Nippon India Retirement Fund, Tata Retirement Savings Progressive Plan, Aditya Birla Sunlife Retirement Fund, Tata Retirement Savings Conservative Fund.
(Disclaimer: This article is only meant to provide information. News9live.com does not recommend buying or selling shares or subscriptions of any IPO and Mutual Funds.)
Mutual Fund retirement plan: With the rise in awareness retirement funds are becoming popular. AMFI data reveal that the assets under management of retirement funds stood at 28,713 crore on June 30, 2024. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
