Retirement and pension are synonymous to
each other. Investors have started feeling that buying pension plan
will only take them to a secure retirement. Retirement planning is the
selection of products become easy.
Retirement planning has three steps –
accumulation, preservation and distribution. In accumulation stage you
invest in different investment products based on your risk profile and
time horizon towards retirement. Preservation and distribution stages go
parallel to each other and these stages come after getting retired.
Pension plan works on the concept of preserving wealth accumulated and
incur retirement expenses. Mutual funds are very tax efficient compared
to pension plans and flexible investment instrument offered by mutual
fund helps to plan retirement more efficiently.
In accumulation stage of retirement
planning one just have to decide which mutual fund scheme they should
select and the asset allocation that they want to go with and they can
also make a combination of equity, debt, gold and real estate depending
on their risk profile and time period. As retirement savings are
generally of very long term nature so one can select among diversified
equity funds which may include a combination of Large and Mid-cap funds,
also in case of debt allocation they may also go for long term debt
funds.
At the preservation and distribution
stage one need to go for more of a conservative side following a
defensive approach with investment in short term debt fund, fixed
maturity plan etc. Herewith one should also look for regular income
generation, so one can go for systematic withdrawal plan or dividend
pay-out options offered by various fund houses.
Here are the top 4 mutual fund schemes for retirement planning.
- Franklin India Pension Plan
- UTI Retirement Benefit Pension
- TATA Retirement Saving Fund
- ICICI Pru Pension Plan
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