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Mutual Fund Tactics For The Retirees

Mr. C.S. Sudheer | Posted On Wednesday, April 04,2018, 05:05 PM

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Mutual Fund Tactics For The Retirees



Many citizens who are retired are planning to invest, or have already invested in mutual funds. After demonetization, banks offered lower interest on FDs and even savings bank accounts. More and more citizens invested in mutual funds, especially equity mutual funds, with the hope of getting high returns.

Many of the citizens investing in equity mutual funds were first-timers, having no idea on how to invest in mutual funds. Even retired citizens were interested in mutual funds, as FDs offered lower interest.

Are there any special tactics for retirees to invest in mutual funds? Let’s find out. Want to know more on mutual funds and investment planning? We at will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. is not a seller of any financial products. We only provide FREE financial advice / education to ensure that you are not mis-guided while buying any kind of financial products.

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Mutual Fund Tactics for the Retirees

1. Learn about risk in mutual funds

Mutual funds do not give guaranteed returns like FDs. They are risky and may give higher returns, but at higher risk. This is the first point retirees need to note, when investing in mutual funds. So retirees sorry….There are no guaranteed returns in mutual funds. If you are investing in equity mutual funds, you must stay invested for at least 3-5 years.

Investing for the long-term in equity mutual funds, gives higher returns with lesser risk.

SEE ALSO: Mutual Fund for Housewives

2. Retirees must invest in balanced funds

Balanced funds invest in a mix of debt and equity. The equity portion gives inflation-beating returns and debt protects your investment, if the stock market crashes. Balanced funds are less risky, when compared to equity mutual funds. Many retirees rushed to invest in balanced funds, because they offered good dividends.

Retirees saw these dividends as a regular source of income. Balanced funds were heavily marketed by mutual fund distributors, who marketed these products saying….Avail balanced funds for good dividends…..

After stock markets crashed and the Government introduced a Dividend Distribution Tax (DDT) of 10% on equity oriented mutual funds, retirees were no longer keen to invest in balanced funds.

Balanced funds are good for investors, who are willing to stay invested for at least 5 years.

SEE ALSO: How To Choose Your Mutual Fund Portfolio?

3. Retirees must use the Systematic Withdrawal Plan

Systematic Withdrawal Plans also called SWP, allows the systematic redemption of your money, from mutual funds. SWP allows you to withdraw the accumulated corpus in mutual funds, over a period of time, instead of all at once.

SWP helps retired people enjoy a fixed income each month, as money comes directly to your savings bank account. What is SWP? SWP is a service offered by mutual funds, that allow you to withdraw a specific amount of money at pre-determined time intervals like monthly, quarterly or even once a year.

Why should retirees opt for SWP? SWP is very good for retired citizens who want to stay invested in mutual funds and only remove small amounts, when they need the money. This is just like a pension.

It is good to use the SWP option for debt funds. SWP can also be an excellent second income. You can invest money in a hybrid scheme like a Monthly Investment Plan (MIP). The capital is protected and the gains can be withdrawn through the SWP to give a second income.

Mutual funds can be an excellent investment for retirees who can understand the risk in this investment and are willing to stay invested for the long-term. Be Wise, Get Rich. 

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