Plan for investment in mutual funds for retirement like this, old age will be cut easily

Savings alone may not be sufficient to meet all the expenses and emergency needs. However, there are many ways to build a hefty corpus for your retirement life.

If you invest in mutual funds with financial planning, you can create a hefty fund for your retirement. Because your financial planning ensures a safer and more comfortable future. Most people do not realize the importance of laying the groundwork for retirement. What people fail to understand is that they may need a huge corpus as a financial back up to depend on it for at least 15-20 years post retirement.

According to experts, savings alone may not be enough to meet all expenses and emergency needs. However, there are many ways to build a hefty corpus for your retirement life, and one of them is through mutual funds. For this, first of all you should set your goal to create a fund through mutual funds. How will your annual expenses be managed after retirement?

Explain that the next step for retirement is to choose the right mutual fund schemes that suit your goals. You can divide the investment time into three parts on the basis of age. Investors who are just starting out should focus on mid and small-cap mutual funds. Investors in the middle age group of 36 to 50 should invest in large-cap and mid-cap mutual funds. Investors above the age of 50 who are late starters should only look at large-cap mutual funds.

Turn to Hybrid Mutual Funds

Investors who are starting early to invest, should gradually move towards hybrid mutual funds at the time of retirement. They should opt for debt mutual funds after retirement, but not less than 40% in equity. Expense ratio is also very important for long term investment, investors should give priority to AMCs, which are offering schemes with lower expense ratio.

Rebalancing is necessary in the portfolio

Wise and timely rebalancing should be done to minimize portfolio changes due to market trends and keep investments on track. When one is saving for retirement, one should be aggressive and hence invest a major portion of one's portfolio in equity, and start shifting capital from equity to debt as one nears retirement. Whether one is using index funds or mutual funds or ETFs is not essential.

Instead of thinking about choosing a particular mutual fund, the focus should be on starting early and keep on doing SIPs irrespective of the market conditions. Apart from this, you should make sure that as your income increases, your savings also increase. With this, it will take less effort to meet the financial goals of retirement life.