Government employees have their post-retirement financial planning taken care of by the Government on their behalf. However, what about those who currently work in the private sector or are self-employed individuals? Such folks need to have a proper retirement plan in place to ensure a comfortable and stress-free post-retirement life.

Do you also fall under the latter category? Then know that investing in the right mutual funds can straighten out your crooked places! Yes, being one of the few avenues that beat inflation, these funds offer excellent returns in the long term, especially when it comes to equity funds. 

Ways to invest

There are mainly two ways to invest in mutual funds – lumpsum or SIP (Systematic Investment Plan). If you’re just starting your journey in the investment market, then the SIP route is the ideal way to go. Under this plan, you need to invest a fixed sum of money every month, which, over a span of 20 to 30 years, will help you build a corpus in an affordable manner.

There are several benefits of investing in a Systematic Investment Plan or SIP, as given below.

• You can invest as much or as little; an SIP can be started with as little as Rs. 500 per month. Choose an amount that you’re comfortable with investing each month.
• With SIP, you can even reduce your risk as you age. This is because there are provisions to switch between equity and debt funds – a systematic transfer plan.
• By choosing an ELSS or Equity Linked Savings Scheme, you can even save on your income tax liabilities every year as prescribed under Section 80C of the Income Tax Act. 

Benefits

Choosing MFs for retirement planning will offer you the following benefits –

#1 Flexibility

MFs are incredibly flexible. This is because there are no restrictions regarding withdrawals, be it partial or complete. You can withdraw your funds as and when you please. Moreover, you may also discontinue with the investment process or switch to another MF – one that you find to be more profitable.

#2 Tax efficiency

Another major benefit of using mutual funds to plan your retirement is that they are highly tax-efficient. This is especially true in the case of equity funds wherein the long-term capital gains remain tax-free up to a maximum of Rs. 1 lakh. On the other hand, though taxes are charged on debt funds, they are usually levied after indexation, wherein the taxes reduce to nil.

#3 Transparency

Post-retirement life demands that you have a stable source of income to enjoy the lifestyle you want. With the help of MFs, you never have to worry about transparency as all information regarding these funds is easily accessible.

Want to start planning for retirement today? Start investing in MFs from the comfort of your home! Various investment applications like Tata Capital’s Moneyfy allows you to compare funds and choose the right one based on your investment goals, risk tolerance, and other key requirements.