Here Are Some Tips To Plan Your Retirement With Mutual Funds

Having a sound retirement plan is very important to ensure that there are no financial difficulties in the future. Earlier, a lot of people were opting for investment tools with low-risk returns such as provident funds, bank deposits, and life insurance plans. However, with rising inflation, it has become essential for every individual to make sure that they have an ample supply of funds to take care of themselves once they have retired. This is why more and more individuals are realising that investing in mutual funds can be a much better alternative for wealth creation.

If you are interested to learn more about investing in mutual funds for your retirement plan, here are some tips that can help:

1. Start investing in mutual fund SIPs

One of the best ways that one can build their retirement corpus is to start an SIP investment. Over a long period of time, those making SIP investments can enjoy the benefits of mutual funds. This is because investing in equity funds can help in generating returns that can successfully cope with inflation. Do note that even a slight difference in the return rate on a long-term investment can have quite a significant difference in the final fund value.  So, if an individual still has a lot of time before they retire, it can be beneficial to invest in equity funds, as doing this can help them build a large corpus.

2. Be consistent with SIP investments

Those who are investing in mutual funds for their retirement need to make sure that their investments are regular. One should avoid withdrawing the accumulated retirement corpus. This is because even the withdrawal of a small amount can end up making a sizeable dent in the final corpus. It is better to treat SIP investments just like monthly EMIs and make disciplined payments. It is possible to plan the SIPs in such a way that the funds would get debited from the account at the start of the month. The purpose of this is to ensure that the SIP investments are being made before the monthly expenses begin.

3. Shift your asset allocation from equity to debt funds when approaching retirement

When an individual starts building their retirement portfolio, they can initially opt for SIPs in equity funds for better returns. However, as they reach closer to retirement, the primary goal would be to ensure the safety of their investments. To safeguard their investments, they can then slowly make the shift from equity funds to debt funds, as the latter is considered to be less risky. It is possible to gradually shift units from equity funds to debt funds at regular periodic intervals by setting up a systematic transfer plan (STP).

It is better to start your mutual fund investment as soon as possible as this would give time for your money to grow. It is also advisable to take help from a mutual fund expert so that you make informed decisions on your investments.

Reference links:

https://www.finedge.in/blog/3-tips-to-plan-your-retirement-with-mutual-funds

https://www.forbes.com/advisor/in/investing/how-to-invest-in-mutual-funds-to-plan-your-retirement/