Significant rise in healthcare costs, growing trend of nuclear families and increasing life expectancy are likely to encourage more investors to invest in these funds, according to a statement from ICRA Analytics.
Growing awareness has led to an increase in the number of folioswhich has increased by 17.44% over the last five years to 29.36 lakh as of July 2024, up from 25 lakh in July 2019. The number of schemes has also increased from 21 in 2019 to 29 in 2024. The average compounded annual returns of these funds stood at 26.21%, 12.97% and 14.09% for a period of 1 year, 3 years and 5 years respectively.
“Investors are showing interest in retirement funds “Mutual funds are a cost-effective option as they are managed by specialised fund managers and are custom-designed keeping in mind the risk-bearing capacity, investment horizon and financial goals of an individual. The fund manager typically allocates the fund to various asset classes namely equity, debt and sometimes real estate, which results in portfolio diversification and mitigates the risk factor,” said Ashwini Kumar, Senior Vice President and Head – Market Data, ICRA Analytics.
“The lock-in period discourages investors from withdrawing money too early, resulting in an increase in retirement capital. Therefore, these funds can be considered a good option for retirement planning,” he added.
Growing awareness of the importance of financial planning and the need to build a retirement fund is encouraging investors to opt for retirement. mutual funds “Retirement funds have a number of unique advantages. They offer flexibility to investors, allowing them to choose from different asset allocation strategies based on their risk tolerance and long-term investment objective. They are less risky compared to pure equity funds. Managed by professional fund managers, these funds follow a disciplined investment approach that results in significant wealth appreciation and preservation. The investor can enjoy the power of compounding by staying invested for the long term and through systematic investments, can build a significant corpus over the working years,” Kumar said. “It is imperative for one to have a well-thought-out retirement plan that is in tune with their risk tolerance, investment horizon and investment objective as regular income will cease to exist post-retirement. Considering the higher price levels, rising healthcare costs, rising trend of nuclear families and longer life expectancy, retirement funds are expected to gain ground in the coming years,” he added.
A retirement mutual fund is a specialized and solution-oriented mutual fund that aims to ensure that the investor has a comfortable and secure life after retirement. These funds have exposure to both equity and debt, where the equity segment encourages wealth appreciation, while the debt segment ensures wealth preservation and stability. A retirement mutual fund helps provide a regular stream of income when one retires and there is no regular monthly income and comes with a lock-in period of 5 years or till retirement.
Disclaimer:
The information contained in this post is for general information purposes only. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained on the post for any purpose.
We respect the intellectual property rights of content creators. If you are the owner of any material featured on our website and have concerns about its use, please contact us. We are committed to addressing any copyright issues promptly and will remove any material within 2 days of receiving a request from the rightful owner.