Beginnings are hard BUT the end goal is glorious

Different people invest for different goals, but the majority of people invest for a secure future. It is imperative that you invest at least some part of your income for your retirement because the truth is that you will not be earning an active income once you get retired.

This is the reason retirement planning plays a vital role in every individual’s life. One should always plan for their future and invest some part of their income towards it. There is a huge number of retirement investment options available for people. Among all of those options, mutual funds have to be one of the best options available. Many people are not aware of the fact that mutual funds offer an investment avenue known as Retirement Mutual Fund, which is an amazing option.

Mutual funds for retirement planning

Do you know what’s the most important attributes of wealth creation? Return on investment. Mutual funds allow you to get introduced to various asset classes and sub-classes, which may help you to get higher returns.

You can invest in Retirement Mutual Funds in two ways. They are listed as follows:

Lump-sum investment: This is the kind of investment where the entire amount of retirement is invested in one payment. It is mostly preferred by people who have good cash reserves and are okay with taking risks.

Systematic Investment Plan (SIP): In this, you have to pay the amount in installments. It can be monthly or quarterly etc. In short, it is done in a planned manner.

Why Choose Mutual Funds for Retirement?

Flexible: The main benefit of mutual funds is that, unlike other retirement policies, you don’t have to compulsorily choose an annuity payout. The investor gets a choice to withdraw the fund amount in either lump-sum or monthly payout depending on your unique financial needs and plans.

Tax benefit: Investing in mutual funds allows investors to avail of tax deductions in certain schemes. Even the redemption is will have lower tax implications as compared to your regular income tax.

Long-term savings: The main purpose of mutual funds is to provide people with financial stability post-retirement. The schemes offered by mutual funds help create an income that can be used by the investor once he/she retires.

Protection against inflation: If you want to protect your assets against inflation, you can invest in mutual funds. Moreover, these funds offer compensation against inflation. Besides that, the investor is allowed to withdraw 1/3rd of the total amount after retirement. The remaining 2/3rd of the corpus can be used as a monthly annuity by the investor.

Risk-free investment: Retirement mutual fund has an extremely low-risk profile that eventually makes them one of the safest investment options. This fund lets the investor enjoy a great rate of return.

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Why now?

If you start early, then it means you have more years to save, more years where the market can compound your wealth, and a lesser amount you need to save per month. If you delay by 5 years, then the amount you need to invest, just doubles.

Figure out how much money you need to retire

The total amount of money you need to retire is a combination of your current income and expenses, and how you believe those expenses might change in retirement. For example, a person who earns Rs. 12,00,000 per year before retirement should expect to need around Rs. 800,000 to Rs. 10,00,000 per year after retirement. However, if you have put aside your dream while you were earning to retire wealthy and want to enjoy your specific hobby like traveling etc, then you need a yearly income of at least Rs. 15,00,000 to Rs. 25,00,000. Therefore, you must save accordingly.

Conclusion

There are several retirement investment options available to people. However, one should have proper knowledge before investing their hard-earned money. There are many investment avenues and mutual funds are one of them. One must consider them as they have numerous benefits such as providing high ROI while minimizing risks. Before making a retirement investment, think about the long-term goal to earn high returns.

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