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How Mutual Funds Can Act as an Avenue to Park Your...

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At the time when a person is about to retire and only a few years are left, then thinking of investing some portion of their income in their retirement savings seems of great importance. Though, the retirement planning should be done way advance. The early it's done, better returns you get.

As the time comes closer of your retirement and your non-earning period is about to begin, you should have a beforehand retirement corpus plan to go smoothly and without any hustle in order to live an untroubled and respected life. 

So how would you arrange the retirement corpus? Well, the best possible corpus can be arranged if you invest in mutual funds products. Many people have a fear in their mind to invest in mutual funds, but there are many benefits of keeping a portion of their income and investing that in mutual funds to make their retirement sound and smooth.

The retirement income you get out of it, through interests, dividends etc will be in accordance with the inflation even during the retired years. Many types of research have been conducted and it has been studied that investing in mutual funds has proved out to be more beneficial than investing in any other asset.

A significant portion of debt funds can also be kept by the retiree because of its effortless and easy liquidity. Along with the mutual funds, there are monthly income plans (MIP) in which one can allocate a certain amount of his income with further diversification and balanced funds. Retirees are not advised to invest in sectoral and thematic funds, including small and mid caps. But it is acceptable to invest in large caps. This is because the primary focus is on generating stable and constant returns rather than high but uncertain and erratic returns. 

How could investing in mutual funds make your retirement corpus good enough?

There are many benefits which you should be aware of about mutual funds if you invest your retirement portion of savings into these funds and create a decent amount of corpus. The advantages are-

1) Mutual funds are safe and your money is protected

Doubtlessly, if you talk about the equity funds which are moved with the market forces, they could be quite risky as they are short term equity funds and hence are unstable. But if we talk about the long term equity funds, its data shows that the risks involved in these funds are negligible.

If you invest in a fund of over a 15 year period, there is no possibility that you experience any kind of negative returns in the stock market. Moreover, it considers inflation and delivers the returns in accordance with inflation over the long term. It means your money is absolutely safe and you will get a definite good return if you keep your investment that longs for your retirement. 

2) Mutual funds have nothing to do with equity markets and cover a wide range of options

Many people get confused and mix mutual funds with the equity markets. Both are way too different. Mutual funds offer a vast range from medium to very low-risk debt instruments too. Even without holding gold physically, it allows you to explore developed international markets like that of the United States.

Mutual funds also offer a great combination of debt and equity, in which the equity part is extreme, either it would be too high to too low as it depends upon the risk you can assume.

For the retirees, it is suggested to go for debt mutual funds as it specifies regular and fixed returns which are needed to most of the retirees at the time of their retirement.

3) Mutual funds give steady returns just like deposits

If one would ask you at the time of retirement, what is your objective behind saving for investment? The answer would be to build sufficient corpus until you retire.

A healthy corpus can only be made if the investment is made in safe and secure avenues of investment so that your fixed monthly or annual income could be effortlessly generated once you retire. This option is provided if you invest in mutual funds.

It is a well-diversified basket which grants enough exposure to several asset classes using a single product called mutual fund. The only thing before investing in any funds is to have complete knowledge about it and always scrutinize all the related documents before doing any investment.

 

 


WRITTEN BY : admin

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