How To Invest In Mutual Fund Retirement Plans

Retirement planning

Retirement is one of the most crucial financial goals of an individual. Thus, due care has to be taken in choosing the appropriate retirement plan. The retirement plan should not only help to preserve capital but also provide inflation-beating returns during one’s golden years. Mutual funds are structured to offer annuity payouts or lump sum and offer a wide range of products for retirement savings.

Role of mutual funds in retirement planning

If you are an employee, most financial aspects of your retirement are sorted by the government already. But those individuals who are self-employed or working in the private sector, retirement planning becomes quite essential. Mutual fund investment is one of the few investment options that can aid to beat inflation. They must make mutual funds the centerpiece of their retirement planning.

In simple terms, a mutual fund scheme pools money from various investors and then invests that money in different securities such as equity stocks, debt, money market instruments, etc. In the long run, mutual funds offer substantial returns and help build a corpus for your post-retirement needs.

Who should invest in retirement plans?

Any individual who is aged 60 or below can invest in retirement planning schemes. Note that, usually there is a mandatory lock-in period of five years or till retirement age (whichever is former), for investments made in these funds.

How much should you save and invest?

Let us assume you need Rs 3.2 Crores for retirement and you have around ten years left for achieving your retirement corpus. Assuming you get returns around 8% p.a. on your savings, you need to save nearly Rs 1.75 lakhs per month just to meet your retirement goal. For several investors, it may seem an overwhelming task as they may have other financial responsibilities such as saving for children’s marriage children’s education, home loan EMIs, etc.

While the task is formidable, it can be easily achieved if you have a proper financial plan in place from the start, and you begin saving for retirement early in your careers. Mutual funds can help you meet your retirement plans while fulfilling your new aspirations at the same time.

How to invest?

To invest in mutual funds, KYC (know your customer) compliance is mandatory. You can complete your KYC formalities beforehand or submit the form and supporting documents at the time of investing. If an investor already has a folio with the mutual fund house, the same can be used for fresh investments too. You can invest in mutual funds online or offline also.

Choice of frequency

One can invest in mutual funds as a lumpsum in one go or through SIP. In SIP investments, an investor can make a debit instruction in their account so that every month a predetermined amount gets invested towards their retirement corpus.

Choice of asset allocation

One can choose an asset allocation plan that best suits their risk vs return profile. The retirement fund offers a choice of diverse asset allocation from investing in equity to only fixed income securities.


Investments made in notified retirement funds of mutual funds qualify for tax deduction under Section 80C. of the Income Tax Act, 1961.

Point to note

It is best to take the advice of an expert or a retirement adviser while choosing a retirement plan. Now that you have realized the Importance of retirement planning get right to it. Happy investing!

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