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Retirement, a phase of an individual’s life in which they are very interested in investing in risky or market linked investments like mutual funds and stock markets.
During their working years, they prefer these market-linked investments to create retirement wealth but as they start approaching their retirement, slowly they transfer all their wealth created to safe investment options like bank FD’s or saving bank account.
Well experts say even after retirement, retirees can look towards staying invested in mutual funds further. However, retirees should be a little careful and do their homework before they decide to continue with mutual funds.
Let us see how an individual can invest in mutual funds after they retire!
Why Retirees Fear Investing In Mutual Fund?
Retirees after they retire do not have a regular source of income that hinders them from getting engaged with any risky type of investments. Most retired people fear the volatility or fluctuation in returns of Mutual Funds and stay away from them
Thus, if they plan to invest after they retire they look for funds that have the null amount of risk and offer stable and fix returns.
Why Retirees Should Invest In Mutual Funds?
Mutual fund investors have numerous benefits over other safe investments such as FD’s (Fixed deposits). As mutual funds are highly liquid, you can take out your investments anytime you want while FD’s have a lock-in period, and you might be penalized if you withdraw before maturity.
Mutual funds also offer better post-tax returns, you can save tax with these tax-efficient mutual fund schemes.
How Retirees Can Continue Investing in Mutual Funds?
Well, there is a number of ways or strategies through which investors even after they retire can continue investing in mutual funds, earn good returns that too on low terms of risk.
Experts say if you are investing in mutual funds for retirement, then as soon as you approach your retirement, say 2 or 5 years away from reaching your retirement then start transferring or putting part of your retirement corpus in debt mutual funds. This will ensure both safety and growth to your retirement corpus. Once you retire, opt for an SWP (Systematic Withdrawal Plan). This will help you earn a regular monthly income from such investments.
Investing this way after you retire will also help you save on taxes. This is because SWP in debt funds provides tax-efficient returns as compared to bank FDs. While on the other hand income from FDs/pension plans is taxed at higher effective rates compared to withdrawals under SWP.
You can easily stop an SWP or change the withdrawal amount anytime depending on your need unlike in a pension plan. Thus, retirees should include Mutual Funds in their financial plans.
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For any kind of query, you can contact us at Shri Ashutosh Securities Pvt Ltd., we are here to help you in any way possible.
Happy Investing!
(Mutual Fund investments are subject to market risk Illustrations are for example only, there is no guarantee of returns. Past performance is not an indicator/guarantee to future returns).