Financial planning is important as it ensures a better and more comfortable future. Most people don’t realize the importance of laying the groundwork for retirement. What people fail to understand is that they would need a huge corpus as a financial backup to rely on for at least 15-20 years of retirement. Financial advisors say that savings alone may not be enough to meet all expenses and emergency needs. However, there are many ways to build a huge corpus for your retired life, and one of them is mutual funds,
Hemant Sood, Founder, Findock said, first of all, to create a corpus through mutual funds, one must ascertain their financial goals.
After figuring out your financial goals, you need to ask yourself these questions
-How much monthly income do I need to maintain a comfortable lifestyle?
What will your annual expenses look like after retirement?
– How much time do you have to spare?
-Do you need provisions for any future emergencies such as medical and additional costs?
-What rate of return do you need to meet your goals?
He further suggested that the next step is to choose the right mutual fund schemes that aligns with your goals. While choosing a fund, Hemant Sood advises considering all aspects such as the fund’s performance history, expense ratio and experience of the fund manager to take an informed decision.
Divide the investment journey into three parts
GCL Broking CEO Ravi Singhal said that on the basis of age we can divide the investment journey into three parts
Age 20-35: Investors who are just starting out should focus on mid and small-cap mutual funds.
Age 36-50: Mid-age investors should invest in large-cap and mid-cap mutual funds.
Above 50: And investors who are late starters should only look at large-cap mutual funds.
Ravi Singhal suggested that investors who are early starters should also shift their investments as per the above schedule with their age.
Fund for long term investment
Hemant Sood said that while equity fund Primarily recommended for long term, you can also choose debt or hybrid funds.
At the time of retirement, he should gradually move towards hybrid mutual funds. Ravi Singhal said that one should opt for mutual funds with high allocation in debt but not less than 40% in equity after retirement.
Expense ratio is also very important for long term investment, investors should prefer AMCs, which are offering schemes with low expense ratio.
portfolio rebalancing
Hemant Sood said that wise and timely rebalancing should be done to minimize portfolio changes due to market trends and keep investments on track.
If you are disciplined with your mutual fund investments, it will take less effort to meet the financial goals of a happy retired life in the long run.
Disclaimer: The views and recommendations given above are those of individual analysts and not Mint’s. We advise investors to do due diligence with certified experts before making any investment decision.
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