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  • Best Retirement Funds

  • Pension plans from insurance companies, National Saving Certificate (NSC), Employee Provident Fund (EPF) and Public Provident Fund (PPF) are the savings instruments that come to mind when planning for retirement. Many of us don’t even make adequate plans for retirement and end up depending on our daughters and sons. However, if you are not averse to taking a bit of risk with your money, mutual funds are a great investment for your retirement years. The earlier you start saving for your superannuation, the more corpus you’ll have when the time comes. Though there are retirement-targeted mutual funds, you may also opt for a regular equity, debt or hybrid fund on a long-term basis for wealth creation.

    Best Retirement Funds
    Best Retirement Funds

    Why Mutual Fund?

    Here are some of the reasons to consider mutual funds for retirement planning:

    • Low cost: Mutual funds do not require high inputs. Most retirement funds need an input of just around Rs. 1,000 per month. However, choose a fund that has limited fees and charges such as entry and exit load, fund management charges, etc.
    • Beat the inflation: As you grow older, inflation could also rise, making the cost of living higher by the time you are 60 years old. This means that you need to invest in an instrument that also grows at par with the inflation rates, or better. Growth mutual funds are ideal under such a situation.
    • Liquidity: If your fund does not have a lock-on period, you can liquidate your fund and withdraw money whenever you want. It takes less than 2 days for the amount to be credited to your account once you sell of the units. Lock-in periods are usually as short as 3-5 years, unlike pension schemes such as PPF that has 15-year lock-in period.
    • Tax efficient: Short-term gains (less than 3 years) on equity funds attract a tax of 15%, while short-term debt fund gains are added to your regular income and taxed as per the income tax slab you fall under. On equity funds, there is no tax on long-term capital gains, but long-term debt fund gains are taxed at 10% without indexation and 20% with indexation.

    Choosing the Best Retirement Plan

    Before you buy a mutual fund, you need to do some research to find the fund that is the most suitable for you. The things you need to keep in mind while doing the research are:

    • Years left for retirement: If you are in the early years of employment – that is, between 22 to 35 years, then you may want to choose a moderate risk fund with steady investment growth and appreciating returns. The older you grow, the more aggressive your investment might need to be, to ensure that at the end of the day you will have enough money to beat inflation during retirement. You may want to plan your savings in such a way that you can live comfortably after your employment years.
    • Risk tolerance: As an investor, you may have a risk level that you are at ease with. Some people are overcautious, some are prudent, and many more are aggressive risk takers. Choose a fund that has a risk level of your standard.
    • Fund goal: Depending on whether you are looking for investment growth or stable savings, you could go for equity funds, debt funds, hybrid funds, growth funds, value funds, etc. There are several options in the mutual fund market. You could mix and match portfolios and fund types to achieve the right level of diversity, capital increase and steady income.
    • Fees and charges: Compare the exit and entry loads, management fees, redemption fees, etc. between different funds before buying one. If the fund size is small with limited Assets under Management (AUM), then the charges are likely to be higher.

    Top Five Funds for Retirement Planning for Investors Between 25 and 40 Years of Age

    Product Name Category 1 Year 3 Year 5 Year Fund Value of Rs.10,000 Invested Per Month (5 Years)
    Aditya Birla Sun Life Small and Midcap Fund – Growth Equity 13.97% 22.94% 28.01% Rs.11,72,257
    Canara Robeco Emerging Equities – Growth Equity 13.24% 20.25% 30.21% Rs.12,33,265
    Franklin India Prima Plus – Growth Equity 10.93% 11.77% 18.77% Rs.9,44,288
    HDFC Balanced Fund – Growth Equity 11.59% 12.97% 19.10% Rs.9,51,705
    Mirae Asset Emerging Bluechip Fund – Growth Equity 12.54% 21.95% 30.39% Rs.12,38,390

    Top Five Funds for Retirement Planning for Investors Between 41 and 50 Years of Age

    Product Name Category 1 Year 3 Years 5 Years Fund Value of Rs.10,000 Invested Per Month (5 Years)
    BNP Paribas Mid Cap Fund – Growth Equity 6.37% 14.17% 23.53% Rs.10,56,239
    Kotak Select Focus Fund – Regular – Growth Equity 10.46% 15.40% 20.60% Rs.9,85,995
    L&T India Prudence Fund – Regular – Growth Equity 11.00% 12.88% 18.69% Rs.9,42,499
    Mirae Asset India Equity Fund – Regular – Growth Equity 15.23% 15.64% 20.57% Rs.9,85,301
    SBI Magnum Multi Cap Fund – Growth Equity 15.48% 15.91% 20.84% Rs.9,91,611

    Top Five Funds for Retirement Planning for Investors Between 51 and 55 Years Age

    Product Name Category 1 Year 3 Years 5 Years Fund Value of Rs.10,000 Invested Per Month (5 Years)
    Aditya Birla Sun Life Balanced 95 – Growth Equity 9.97% 12.32% 16.72% Rs.8,99,433
    Franklin India Balanced Fund – Growth Equity 9.79% 10.07% 15.88% Rs.8,81,633
    ICICI Prudential Balanced Advantage Fund – Regular – Growth Equity 10.24% 10.45% 14.22% Rs.8,47,348
    Mirae Asset India Equity Fund – Regular – Growth Equity 15.23% 15.64% 20.57% Rs.9,85,301
    SBI Bluechip Fund – Growth Equity 13.65% 13.17% 17.98% Rs.9,26,773

    Top Five Funds for Retirement Planning for Investors Above 56 Years of Age

    Product Name Category 1 Year 3 Years 5 Years Fund Value of Rs.10,000 Invested Per Month (5 Years)
    Aditya Birla Sun Life Balanced 95 – Growth Equity 9.97% 12.32% 16.72% Rs.8,99,433
    Aditya Birla Sun Life Short Term Opportunities Fund – Regular – Growth Debt 5.72% 7.88% 8.79% Rs.7,43,528
    DSP Blackrock Credit Risk Fund – Regular Plan – Growth Debt 5.71% 8.31% 8.74% Rs.7,42,643
    ICICI Prudential Balanced Advantage Fund – Regular – Growth Equity 10.24% 10.45% 14.22% Rs.8,47,348
    Mirae Asset India Equity Fund – Regular – Growth Equity 15.23% 15.64% 20.57% Rs.9,85,301

    GST rate of 18% applicable for all financial services effective July 1, 2017.

    News About Best Retirement Funds

    • 88% of funds in the large-cap category underperforms their benchmark over the past 1 year

      According to the recent S&P Indices Versus Active (SPIVA) India Scorecard, around 88% of funds in the large cap segment has underperformed their benchmark indices. The data recorded is for the last 1 year period ending 30 June 2018. The scorecard has also revealed that 83% of government bond funds and 62% of mid/small cap funds have performed lower than their respective indices. The data has been compiled by a joint venture between S&P Dow Jones Index and the BSE Index - Asia Index Private who revealed the results of the SPIVA India mid-year 2018.

      The S&P BSE 100 Index returned 12.94% with 88% of the schemes underperforming their benchmarks causing the 1-year period to end in black. Over the 3-year and 10-year period ending June 2018, the percentage of large cap funds underperforming their indices touched 78% and 63% respectively. A 42% low style consistency was witnessed by large cap funds over the 1 year period while over the 10-year period a low survivorship rate of 68% was noticed.

      25 October 2018

    • Trade tensions lead to market gains in the first quarter

      Despite the renewed trade anxiety between China and the US, and the increase in the rates by the Reserve Bank of India (RBI), the performance of the stock markets do not seem to be dampened. The BSE Sensex showed a gain of 0.58% on a weekly basis to close at 37,556 while Nifty gained 0.73% to end at 11,361. Financial experts are of the belief that the positive quarterly results and moderation in prices of crude oil will cause an extension in the current momentum. They expect the consumption-related sectors and large-cap firms to perform well because of the mentioned factors.

      The next set of quarter one results will experience market leaders revealing their numbers and this includes companies like D-Street, Adani Ports, Bharat Petroleum Corporation, Lupin and Siemens, Hindalco Industries, Hindustan Petroleum Corporation, GAIL India, etc. On the other side, some US goods will be imposed with delayed tariffs by the Indian government and tightened pressure between the US and China trade front is likely to keep investors in anxiety. <./p>

      6 August 2018

    • Trade tensions lead to market gains in the first quarter

      Despite the renewed trade anxiety between China and the US, and the increase in the rates by the Reserve Bank of India (RBI), the performance of the stock markets do not seem to be dampened. The BSE Sensex showed a gain of 0.58% on a weekly basis to close at 37,556 while Nifty gained 0.73% to end at 11,361. Financial experts are of the belief that the positive quarterly results and moderation in prices of crude oil will cause an extension in the current momentum. They expect the consumption-related sectors and large-cap firms to perform well because of the mentioned factors.

      The next set of quarter one results will experience market leaders revealing their numbers and this includes companies like D-Street, Adani Ports, Bharat Petroleum Corporation, Lupin and Siemens, Hindalco Industries, Hindustan Petroleum Corporation, GAIL India, etc. On the other side, some US goods will be imposed with delayed tariffs by the Indian government and tightened pressure between the US and China trade front is likely to keep investors in anxiety. <./p>

      6 August 2018

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