Many times, retired people are financially dependent on their children. However, now things are changing. There are many schemes which are specially designed for retired people that can help them become financially self-sufficient. One of these options is mutual funds. According to the research, there are more than 7000 different types of mutual funds in India.
Mutual funds are popular investment tools amongst the investors. Due to their cost effectivity, the MF helps your money to grow in the suitable asset class. After retirement, when your regular income is stopped, mutual funds offer various retirement plans similar to those offered by the insurance companies. These plans are an alternative to the traditional pension plans and you can simply rely on them. One can easily save every month for their retirement by investing in mutual fund schemes. Apart from the offering a range of options, the mutual fund provides better benefits.
It is always advisable to invest some amount in certain mutual funds such as debt funds or liquid funds because of their low-risk characteristics as these funds invest in bonds, government securities, commercial bonds, etc.
Following are some of the benefits of mutual funds that the senior citizens can avail –
- Better performing funds give high returns that can beat inflation.
- These funds are professionally managed by the experts with fewer chances of losses.
- Mutual fund provides capital appreciation.
- There are monthly income plans which give you a regular and steady flow of income.
- Withdrawing money from liquid funds is easier as they support withdrawing it the same day.
- You can easily start investing through SIP with a minimum amount of Rs 500 per month and it will help you to build a good corpus for your retired life.
- A mutual fund does not have any restrictions on the regular premium payment, unlike pension plans. Additionally, it allows you to make limited withdrawals and even allows you to discontinue your investment without charging extra penalties which makes it more flexible investment product.
- A mutual fund offers transparency and is friendlier as compared to the pension products as they allow you to select the funds and also provide important information related to the fund manager, associated risks, past returns, etc.
- It is a tax-efficient tool- Long-term capitals which are gained in equity mutual funds like ELSS are completely tax-free. SIP serves as a tax-efficient
- The returns you receive from saving accounts are 4% or 5% that can go up to 6% as compared to 8-9% in case of liquid funds with the additional benefit of liquidity.
- You can even invest in gold ETF’s
The mutual fund gives you many investment opportunities. Looking at the various benefits offered by a mutual fund, it is a viable and ideal solution for the retired people.