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A retirement mutual fund is a solution-oriented investment scheme which allows you to save up for your golden years. It has a lock-in period of 5 years or till you retire, whichever is earlier.
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Retirement funds are solution-oriented mutual funds which aim to create a corpus for retirement. They have a lock-in period which allow you to save in a disciplined manner.
Lock-in of 5 years or till retirement, whichever is earlier
SIP or lump sum investment
Payout in lump sum or through regular income
Tax benefit on invested amount
Asset allocation in equity and debt securities
There’s a lock-in period which restricts liquidity in the initial investment years
You can choose from debt-oriented or equity-oriented funds based on your risk profile
There’s a Systematic Withdrawal Plan (SWP) which gives regular annuities from the accumulated fund
If you invest in equity-oriented funds, invest with a long-term view to ride out short-term volatility.
There might be an exit load on redemption
Those who want regular incomes after retirement
Investors looking to diversify their portfolio
Individuals looking for tax-saving benefits from investments
• Returns up to Rs.1 lakh are tax-free
• Returns exceeding Rs.1 lakh are taxed at 10%
• Returns earned are taxed at income tax slab rates
• Withdraw in a lump sum once the lock-in period is over
• Choose the Systematic Withdrawal Plan and withdraw a fixed amount every month or week from the investment to create a regular source of income. The invested amount keeps on growing.
A retirement fund, also referred to as a pension fund, is an investment vehicle designed for individuals to systematically save a portion of their income to secure financial stability during retirement. These funds provide a consistent income stream in the form of an annuity throughout the retiree's lifetime.
Managed on behalf of the investor, pension funds invest in a diversified portfolio, typically favoring low-risk options such as government securities to ensure stable returns. The generated income from these investments contributes to the interest provided on the pooled funds. Equity oriented fund invest in equity product which may result to higher growth but may come with volatility in short term
The fundamental purpose of a retirement mutual fund is to create a retirement corpus for your old age. With targeted maturity, you can save regularly and create a corpus for financial needs after retirement.
Retirement funds serve as a financial resource for meeting daily needs and unexpected expenses. They are particularly well-suited for individuals seeking assured returns in their senior years.
Planning your retirement early in life certainly has its advantages, some advantages of investing in a retirement fund are:
Financial Security for Emergencies: Retirement planning ensures a substantial corpus, providing a safety net for unforeseen financial crises in post-employment years.
Optimized Returns on Investments: Investing in retirement plans allows for savings growth over time, optimizing returns through strategic planning.
Tax Benefits: Retirement plans offer tax advantages, reducing taxable income and enabling effective management of investment expenses within legal frameworks.
Cost Savings Through Early Planning: Initiating retirement planning at a younger age leverages lower premium rates and reduces long-term investment costs.
Peace of Mind and Financial Independence: Retirement planning instills confidence and financial independence, offering a sense of security during various life stages.
If you consider healthcare costs when making investment decisions, you can tailor the investment amount accordingly. The returns from the investment will be sufficient for future medical expenses.
The sum you should invest in retirement depends on individual factors like anticipated retirement age, lifestyle requirements, dependents, and health status. Additionally, it's crucial to make investments adjusted for inflation to ensure adequate returns.
Yes! It is recommended to start retirement savings at the earliest opportunity, preferably when you establish a stable income source. Commencing the practice of saving a portion of your income from the outset proves advantageous.
While the Employees' Provident Fund can contribute to securing a financial reserve for the future, it might not be sufficient. Having an additional layer of financial protection will provide the assurance needed for a comfortable retirement.
If you're not using your retirement funds to pay off your mortgage, it generally makes sense to enter retirement with minimal debt. This approach enhances the potential for a more comfortable lifestyle, particularly when considering that housing constitutes the most substantial expense for the typical retiree household, accounting for nearly 36% of annual expenditures.
In that case, the funds typically go to the beneficiary of the account holder.