With retirement years crawling close, any investor might go wary about their future lifestyle and related expenses. This calls for early planning of your investments. Retirement planning can help in ensuring how you would require going about your savings from that very day, to enjoy a carefree future.
So while you plan your retirement funds for investment, it is essential you explore and evaluate several potential asset classes. Pension funds, endowment policies, fixed deposits and investing in reality sector are a few popular choices. But while you look at all such investment, it would be appropriate to know your requirements to be able to spot the ideal retirement plan for you. A few of these factors that can help you decide on the best suited plan for your retirement are as follows:
- How many years away are you from your retirement?
- What are your financial goals and expectations post-retirement?
- What is your risk appetite?
- How much can you afford to set out from your existing lifestyle expenses monthly for your future investments?
Answering the above queries is important and can contribute a great deal in zeroing to find the best suitable plan for retirement days. Further, to get you more familiar with mutual funds, below are a few reasons, as to how mutual fund can help:
- Tax Benefits and Long-term Capital Appreciation
By investing in equity mutual funds for long-term, your can attain gains and capital appreciation. Tax benefits can also be enjoyed.
There’s enough variety of scheme for different investors. Based on risk appetite and financial goals, there are equity schemes that can provide you capital appreciation and even debt schemes with regular income. You can also explore avenues with hybrid and sectoral fund schemes and leverage the opportunity of earning benefits.
All the years that you invest your funds, as you near your retirement would require you to shift from high risk avenues to comparatively safer ones, which can offer steady and less risky returns. This is because as you retire, your risk appetite will go nil and you would require completely safe assets that offer high liquidity. In mutual fund investments, Systematic Transfer Plan helps you attain the same and allows systematic movement from one scheme to another, especially equity to debt.
Systematic Investment Plan (SIP)
Build your retirement corpus gradually with small and regular investments through SIPs. Sooner you begin investing; larger will be your corpus over a longer duration of investment period. An SIP is a more organized and disciplined way of investing for your future.
Systematic Withdrawal Plan
Giving you the option of automatic withdrawal of specific amounts monthly, quarterly, half yearly or annually is what Systematic Withdrawal Plan offers. This lets you have a regular income, while the rest of the amount would earn you decent returns.
Easy Redemption of Lump Sum Amounts
For your lump sum expenses after retirement, mutual funds allow the flexibility to redeem the amount when required.
Mutual funds are subject to market risk and fluctuations; hence whenever you plan your investment seek advice of a professional financial adviser. So, that your funds are in the safe hands and you get assistance basis the latest developments in market for your investment decisions.
Author Bio – Having varied interests and diverse knowledge, Himani Arora writes articles for several sectors and categories in personal finance i.e. mutual funds, retirement pension plans and investments for reliancemutual.com