14 Best-Performing Retirement Mutual Funds
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26 March 2022Wise investors always plan for their retirement. Only investing in fixed deposits for a consistent income after retirement may not suffice the rising cost of food and living. Investing in mutual funds for retirement is a great way to have financial freedom during the retirement years. But which mutual funds are good for retirement?
This post lists out 14 best retirement mutual funds you can invest in, factors to consider, benefits and if you should invest. Read on!
Top 14 Mutual Funds For Retirement
| S No. | Fund Name | Category | 1 Year Returns (%) | 5 Year Returns (%) | Suitable For |
| 1. | Aditya Birla Sun Life Small and Midcap Fund – Growth | Equity | 13.97 | 28.01 | Investors between 25 and 40 years of age |
| 2. | Canara Robeco Emerging Equities – Growth | Equity | 13.24 | 30.21 | Investors between 25 and 40 years of age |
| 3. | Franklin India Prima Plus – Growth | Equity | 10.93 | 18.77 | Investors between 25 and 40 years of age |
| 4. | HDFC Balanced Fund – Growth | Equity | 11.59 | 19.10 | Investors between 25 and 40 years of age |
| 5. | Mirae Asset Emerging Bluechip Fund – Growth | Equity | 12.54 | 30.39 | Investors between 25 and 40 years of age |
| 6. | BNP Paribas Mid Cap Fund – Growth | Equity | 6.37 | 23.53 | Investors between 41 and 50 years of age |
| 7. | Kotak Select Focus Fund – Regular – Growth | Equity | 10.46 | 20.60 | Investors between 41 and 50 years of age |
| 8. | L&T India Prudence Fund – Regular – Growth | Equity | 11 | 18.69 | Investors between 41 and 50 years of age |
| 9. | Mirae Asset India Equity Fund – Regular – Growth | Equity | 15.23 | 20.57 | Investors between 41 and 55 years of age |
| 10. | SBI Magnum Multi Cap Fund – Growth | Equity | 15.48 | 20.84 | Investors between 41 and 50 years of age |
| 11. | Aditya Birla Sund Life Balanced 95 – Growth | Equity | 9.97 | 16.72 | Investors between 51 and 55 years of age |
| 12. | Franklin India Balanced Fund – Growth | Equity | 9.79 | 15.88 | Investors between 51 and 55 years of age |
| 13. | ICICI Prudential Balanced Advantage Fund – Regular – Growth | Equity | 10.24 | 14.22 | Investors between 51 and 55 years of age |
| 14. | SBI Bluechip Fund – Growth | Equity | 13.65 | 17.98 | Investors between 51 and 55 years of age |
Who Should Invest in Retirement Mutual Funds
Mutual funds for retirement are suitable for all types of investors who are looking to create wealth in the long term. Financial independence during old age can play a crucial role in determining what sort of life you’re going to have when you grow old. With that being said, certain retirement mutual funds are suitable for early investors and some others are suitable for late investors. Refer to the aforementioned list of top 14 mutual funds for retirement.
Conservative investors should stick to large-cap mutual funds, and moderate investors to flexi-cap funds. You should not stop investing if the markets are volatile and hold on to your investments long term to generate high gains and stay on top of inflation while navigating smoothly through the volatility. Retirement mutual funds are designed perfectly in a combination of equities, debt, and other asset classes to generate returns while being highly diversified.
Factors To Consider Before Investing
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Investment Goal (Desired Corpus Amount)
This is the most important factor to consider before you invest in mutual funds for retirement, or any mutual fund for that matter. Having the corpus amount in mind before you start investing will let you know how much you should invest in which fund. Managing the risk involved, adjusting the amount invested, and the time period you’re going to invest for, is crucial to generate the desired corpus amount. Keep in mind that every individual’s financial objectives are different, so it’s important not to compare yourself with your family members or friends.
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Risk Factor
Analysing the risk factor involved based on the mutual fund you select is vital to know if it matches your portfolio and investing needs. Some investors are willing to take high risks to generate high returns and are ready to navigate through the volatile markets, but some other investors, often conservative in nature, want to invest in low-risk funds. While this means that the returns would comparatively be less, there is more guarantee that they won’t lose all their money. Holding on to your investment for a long period of time will fetch you great returns if you’re investing in a high-risk-high-reward retirement mutual fund.
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Fund’s Past Performance
Carefully analysing the mutual fund’s past performance and learning more about the fund manager will help you choose the best-suited retirement mutual fund for your portfolio. This is important to learn if the fund has been able to live up to what it promised in the past and will help the investors gauge what will happen in the future. While these predictions are not accurate, they certainly are meaningful. Comparison with other similar mutual funds for retirement will also give you better clarity.
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Expense Ratio
Fund houses impose a fee called the expense ratio on investors to handle all the administrative expenses. This is usually a small percentage of a scheme’s total assets and varies from one fund to another. It’s important to analyze each fund’s expense ratio and compare it with other similar funds before investing when it comes to equity mutual funds for retirement. While the ratio may seem small, it might be huge in absolute monetary terms.
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Taxability
Any contribution to mutual funds for retirement is tax-deductible for up to a maximum of INR 1.5 Lakhs under section 80CCC. The withdrawals, on the other hand, are tax-deductible. If the investor chooses to withdraw as an annuity (fixed stream of payments), tax is applied according to the slab rate similar to salary income. During disbursal, however, government employees including armed forces are completely exempt from taxes.
It is also important to note that new retirement funds do not qualify for tax breaks, while the old ones still do (under Section 80C). This would make it seem like the old retirement mutual funds are better when compared to new ones, but really, this gap is offset by the change in returns value.
Also Read: Best Gold Mutual Funds in India to Invest in 2022
Benefits Of Retirement Mutual Funds
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Long-Term Savings
Retirement funds are perfect for retirement and the returns are generally appreciable and can be reinvested in other funds. Despite the mode of returns you choose (lump-sum or annuity), retirement mutual funds are designed to generate long-term savings.
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Flexibility
This is one of the best advantages retirement mutual funds have. The returns you receive, can either be lump-sum or a monthly annuity. Perfect for all types of money needs, you can either choose to receive a lump-sum amount if you have enough emergency funds and less need for money or choose to receive the payments in a fixed stream to get out of temporary money crunches.
Final Word
Investing in retirement mutual funds can help you get the financial freedom after retirement. A steady source of income will provide a financial cushion against all adverse situations. It is best to start investing as early as possible and secure your future. If you are ready to start investing in mutual funds, go to Navi Mutual Funds for hassle-free, paperless process. You can also choose to invest in through platforms like Paytm Money, Coin by Zerodha, and Groww to name a few.
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