- Date : 18/08/2022
- Read: 4 mins
Mutual Fund and its long-term benefits are for you if you are worried about your future and retirement. It is not only the best investment plan but also an aid to your finances. Mutual Fund Investments are considered to be the best way to plan out for your future and have better stability.
Do you belong to the group of individuals who are finding ways to secure their future and plan to spend their old age without any financial distress? If yes, you might be aware of mutual funds retirement plans! Nowadays, the preferred returns have been largely lying around 5 crores considering the inflations per year.
The purpose of planning retirement is to compute all the kinds of income you may need in retirement. These savings and investments take long-term planning thus, let’s first introduce you finely to Retirement Funds.
What is a Retirement Fund?
Popularly known as Pension Funds, Retirement Funds are options for investment that will allow you to save a part of your income for your retirement. Providing a continual source of income after retiring, allows you to receive an annuity on your investment up until your death. These do not depend on the volatility of the market or even on assets, rather, solely offer a fixed benefit.
These pension funds are either received as a lump sum of the total investment made or as a monthly annuity.
To a maximum amount of INR 1.5 Lakh, Retirement Mutual Funds are tax exempted. However, withdrawals are subject to a tax deduction. A monthly annuity is fully taxable. To gain some more knowledge regarding this taxability we suggest you visit How life insurance and pension policies are taxed on maturity.
Best Mutual Funds for Retirement
We need to invest wisely to gain the required amount we aimed for. To get you to start investing, here are some good mutual funds securing your capital by guaranteeing quite a good corpus at retirement:
- ICICI Prudential Retirement Fund- Pure Equity (Direct-Growth) : This particular mutual fund scheme is launched by ICICI Prudential Mutual Fund. Generating a long-term return and coming, if you seek security regarding equity and related.
- Retirement Savings Fund Equity Scheme Direct-Growth- HDFC : Launched by the HDFC Mutual Fund, it is a ‘solution-oriented mutual fund plan. The main motive behind the plan is to give capital income or capital appreciation for the long term, through making investments in debt instruments and a mix of equity. It is popularly known as the best Retirement Plan as it aids investors in fulfilling their retirement goals.
- ICICI Prudential Retirement Scheme (Hybrid with Aggressive Direct Growth Plan): This solution-oriented scheme is launched by Prudential Mutual Fund by ICICI. It allows the investors to make investments in either equity or other equity-related funds for generating capital income.
- HDFC Retirement Savings Fund Hybrid Equity Plan Direct-Growth: This scheme is also a mutual fund solution-oriented scheme by HDFC. Like the ICICI hybrid plan, this plan focuses on equity and other equity-related investments too.
- Retirement Savings Fund Progressive Scheme Regular Growth - Tata: Similar to most other mutual fund schemes in this list, the Tata Retirement Plan is also a mutual fund Solution Oriented Scheme. It is the plan that will give you financial security in the long run as it acts as a financial planning tool for investors.
Can you have a five-crore corpus after retirement through mutual funds?
“Crore for my retirement” is a very aggressive plan. Taking 10-12% of return, and considering you have a minimum of ten to twelve years to achieve so, you will need INR 1.6 to 1.8 Lakh as each month’s savings. This is estimated considering the return assumptions moderate to high. To protect yourself from poor returns from active funds, we suggest investing in a mix of passive and active funds.
You can visit Active or Passive Investing: What's your choice? - Savvy Women to understand passive and active funds.
Experts state that choosing random amounts such as a crore or 5 crore is not the best way to calculate your retirement targets. Inflation, the period of investment with the targeted sum to be built at the end of retirement is necessary to have a clear idea of the estimated amount required as your monthly savings in mutual funds.
To calculate your retirement planning, you can use online calculators available on Tomorrow makers Retirement Plan Calculator
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Disclaimer: This blog serves educational purposes. The blog should not be considered to be expert advice. All the finance schemes are subject to market risk. Hence, you must read all the documents carefully and make the investment at your own risk.