Mutual funds can form the backbone of your retirement plan

Failing to plan for your retirement now is planning to fail financially after retirement. Who doesn’t look forward to that golden period – free from work and family-related responsibilities? You have all the time to pursue your passions. But to be able to lead a comfortable life post-retirement, you need to have significant retirement corpus as well as a steady source of income (pension).

Latest update:
The CBDT notifies Form 12BBA, a declaration form, to be submitted by the eligible senior citizens to the specified banks to take relief from filing the ITR.

In Budget 2021, it has been proposed to exempt senior citizens from filing income tax returns if pension income and interest income are their only annual income sources. Section 194P has been newly inserted to enforce that banks deduct tax on senior citizens of more than 75 years of age who have a pension and interest income from the bank.

Role of mutual funds in your retirement planning

If you are a Central Government employee, most of the financial aspects of your retirement are already sorted by the government. But for those of you who are working in the private sector or are self-employed, retirement planning is essential. A mutual fund is one of the few investment avenues that can beat inflation. You must make mutual funds the centrepiece of your retirement planning. In simple terms, mutual fund pools money from different investors and then invests that money in various equity stocks, debt and money market instruments. In the long run, mutual funds offer excellent returns and help build a corpus for your post-retirement needs.

How to invest in mutual funds for retirement?

Usually, most investors opt for a pension plan for retirement. That is also a good option but is a distant second to the mutual funds. Mutual funds enable you to have equity exposure, but help reduce the risk through diversification of the portfolio. an investment horizon of at least 20 to 30 years and want to make mutual funds the start of your retirement plan, then systematic investment plan (SIP) will help you accumulate and compound wealth in an affordable manner.

Why choose a Systematic Investment Plan?

Systematic Investment Planning, better known as SIP, is a systematic approach to invest money in mutual funds. Under SIP, you invest a fixed amount in the fund of your choice every month. There is no upper limit to investing via SIP, but it is desirable to set an amount which you can afford easily every month. In addition to instilling financial discipline, SIP helps you learn money management skills, which help further with the planning of your retirement.

Let us elaborate with an example. Suppose you are 30 years old and you start a monthly SIP of Rs.10,000. Assuming that the returns on your investment are 12% p.a. (which is a standard rate for most mutual funds) and you continue the SIP for 30 years.

By the time you are 60 years old, you will have a corpus of Rs.3.50 crores approximately. Very few other investment avenues offer you such returns with moderate risk. Using the SIP route to plan your retirement fund is an excellent approach as it offers you several benefits like:

• You can invest as much amount that you are comfortable with as there is no minimum requirement for investment in SIP.
• You can switch between equity and debt instruments with the help of a systematic transfer plan. This helps you reduce your risk exposure as you gradually age.
• Through the ELSS route, you can save on your income tax liabilities every year as the contribution to ELSS is tax-deductible under Section 80C of the Income Tax Act.

Benefits of planning your retirement with mutual funds?

While many of you will be tempted to opt for a pension plan instead of mutual funds for your post-retirement financial requirements, but the fact remains that mutual funds are a safer and a better option. Here are the reasons you need to know while choosing between mutual funds and pension plans.

Flexibility

Mutual funds are more flexible than pension plans. There are no restrictions on making any partial or entire withdrawal at any given point of time. If you feel, you can discontinue your investment and change to another mutual fund as and when you like.

Tax Efficient

Mutual Mutual funds are more tax-efficient as compared to pension plans. Pension income is added to your other incomes for taxation, and there is no exception. While in case of equity mutual funds, long-term capital gains are tax-free up to Rs 1 lakh, and in case of debt funds, it is levied after indexation, which most of the time reduces the tax to nil.

Transparency

Mutual funds are more transparent as compared to pension plans as you can easily access all the information that you want regarding a mutual fund. Post-retirement life requires you to have a stable source of income to be able to continue your lifestyle. With the help of mutual funds, you can easily plan for a secure future and minimise the risks involved.

Frequently Asked Questions

How to invest in mutual funds in India?

You can invest in mutual funds directly with the asset management company (AMC) through the direct plan. You must complete your KYC at a KRA (KYC Registration Agency) online by filling the KYC registration form and uploading the self-attested identity proof such as PAN Card and address proof such as Passport/Driving License/Voter ID and also a passport size photograph. You will also have to complete the IPV (In-Person Verification).

You may also invest in mutual funds through a mutual fund distributor by opting for a regular plan. The mutual fund house would pay a commission to the mutual fund distributor or the intermediary. You may invest in mutual funds offline by visiting the mutual fund house and filling up the application form and submitting documents for KYC compliance.

How to invest in mutual funds online in India?

You may invest directly with the mutual fund house through the direct plan. You just have to visit the website of the fund house and fill up your relevant details such as name, email id, mobile number and bank details.

You may complete the KYC online through eKYC where you enter the Aadhaar and PAN details. Your information would be verified at the backend and you may start investing in mutual funds after transferring money online from your bank account.

You may also invest through an online platform such as cleartax invest

You must log on to cleartax invest

You then select the mutual fund house from the list of fund houses

Pick the mutual fund scheme based on your investment objectives and risk tolerance and click on Invest now

You must select the amount you plan to invest in the mutual fund scheme and the mode as either One Time or Monthly SIP.

You must fill up the requisite details such as name, email ID, mobile number and complete the transaction.

How to invest in mutual funds for beginners in India?

You must choose the appropriate mutual fund scheme based on investment objectives and risk tolerance, if you are a beginner in mutual funds. You may invest in mutual funds online or offline as per your convenience.

You may invest in mutual funds offline in a direct plan of a mutual fund scheme by visiting the branch of the fund house. You can invest in a regular plan through a mutual fund distributor.

You may invest in direct plans of mutual funds online by visiting the website of a fund house. You may complete your eKYC for KYC (Know Your Customer) compliance by submitting Aadhaar and PAN details and then invest in the scheme of your choice. You could complete your KYC at a KRA (KYC Registration Agency) before investing in mutual funds.

How to invest in mutual funds without a Demat account?

You may invest in mutual funds directly with the mutual fund house by visiting the branch of the AMC. You just have to fill up the application form and submit the self-attested identity and address proof for KYC compliance.

You may submit the cheque for the initial amount and you are allotted a PIN and folio number. You can also approach a mutual fund distributor and invest in the regular plan of the mutual fund.

You may invest in a direct plan of a mutual fund online through an AMC. You must fill up the registration form and complete your eKYC by submitting PAN and Aadhaar details. You may also invest in an online portal such as cleartax invest.

How to invest in mutual funds directly?

You may invest in mutual funds directly by visiting the office of the mutual fund house. You must submit your self-attested identity and address proof along with the filled application form and passport size photographs for KYC-compliance. Make a cheque for the first investment and invest in the mutual fund scheme of your choice.

How to invest in direct mutual funds online in India?

You may invest in direct mutual funds online by visiting the website of the mutual fund house. You may fill in the application form and complete your eKYC by submitting your PAN and Aadhaar details.

The AMC would verify your details and you may invest through your online bank account. You may invest in direct mutual funds online in India through the online portals such as cleartax invest.

How much to invest in mutual funds per month?

You may invest in a mutual fund scheme through a systematic investment plan or SIP. It is a method of investing in a mutual fund where you invest a fixed amount regularly in a mutual fund scheme of your choice. You may invest as low as Rs 500 per month through the SIP in the mutual fund scheme of your choice.

How to invest in mutual funds without a broker?

You may invest in a direct plan of a mutual fund either offline or online directly through the asset management company or AMC. You may visit the branch of the fund house and fill up the mutual fund application form and submit the self-attested identity and address proof along with a passport size photograph to complete your KYC.

You may invest in a direct plan of a mutual fund online by visiting the website of the AMC. You may fill the mutual fund application form with required details such as name, bank details and complete your eKYC by submitting your PAN and Aadhaar details. You may invest in mutual funds through your online bank account.

You may invest in mutual funds through an online portal such as cleartax invest.

Log on to cleartax invest

Select the mutual fund house from the list of fund houses

Pick the mutual fund scheme based on your investment objectives and risk tolerance and click on Invest now

Select the amount you plan to invest in the mutual fund scheme and the mode as either One Time or Monthly SIP.

How to invest in equity mutual funds?

You may invest in a direct plan of an equity fund directly through the asset management company (AMC). You may visit the branch of the fund house and fill up the mutual fund application with required details such as name, mobile number and bank details.

Complete your KYC by submitting the self-attested identity and address proof and submit passport size photographs. You may submit the cheque for the initial amount and you are allotted a PIN and folio number. You can also approach a mutual fund distributor and invest in the regular plan of the mutual fund.

You may invest in equity funds online by visiting the website of the mutual fund house. You may fill in the application form online and complete eKYC with PAN and Aadhaar details. Start investing in the mutual fund scheme with your online bank account.

You may invest in equity mutual funds directly through an online portal such as cleartax invest.

How to invest in mutual funds through SIP online?

You must first complete your KYC before investing in a mutual fund. You may do so at a KRA (KYC Registration Agency) online by filling the KYC registration form and submitting the self-attested identity and address proof.

You then visit the website of the fund house and choose the mutual fund scheme of your choice.

You may fill an application form with required details such as name, mobile number, PAN and create a username and password.

You then enter your bank account details and set up the SIP auto-debit amount.

You may log on to your account created at the fund house and choose the mutual fund scheme.

You must make the first SIP instalment online and the next instalment after 30 days. (The AMC will intimate you on the requisite date).

You may continue the SIP till the end of the chosen tenure. (You may decide the tenure of the SIP).

What are mutual funds and how to invest in them?

Mutual funds are a professionally managed investment where the money is pooled by several investors and used to purchase securities. It may invest your money in equity, debt or a mix of both equity and fixed income depending on the type of mutual fund.

You may invest in the direct plan of mutual funds directly through the AMC both offline and online. You may also invest in mutual funds through a mutual fund distributor.

How to invest in US mutual funds in India?

You may invest in US mutual funds through fund of funds (FoFs) schemes with a mutual fund house in India. It is an indian mutual fund scheme that invests in US- based active equity mutual funds. However, they have a higher expense ratio as compared to most equity schemes. You may also invest in indian equity schemes whose portfolio mimics a US stock market index such as S&P 500 or the Nasdaq 100.

You may invest in these fund of funds schemes through an asset management company in India. You could consider completing your KYC before investing in US mutual funds from India.

How to invest a lump sum in mutual funds?

You may invest a lump sum amount in a mutual fund through a direct plan with the asset management company. You could opt for the offline or online mode of investment. You must complete your KYC by submitting a self-attested identity and address proof along with passport size photographs at the branch of the mutual fund house.

You could invest a lump sum amount in mutual funds through an online platform such as cleartax invest. You just have to log on to cleartax invest and select the mutual fund house and the scheme. You then select the amount and the mode of investment as One Time if you want to put a lump sum amount in a mutual fund.

How to invest in mutual funds through demat account?

You may invest in mutual funds through a demat account with your stock broker or through any depository participant. The mutual fund units would be held in the dematerialised form. You can buy and sell mutual fund schemes through your demat account just like shares. It is a dematerialised account which can hold stocks, mutual funds and other securities.

Open a demat and trading account with a stock broker

You can buy and sell units of mutual fund schemes

However, charges are higher as compared to other modes of investing in mutual funds.

How to invest in debt mutual funds?

You may invest in direct plans of debt funds directly with an AMC. You could visit their branch office and fill the application form. You then complete the KYC by submitting the self-attested identity and address proof and passport size photographs.

You may invest in direct plans of debt mutual funds online by visiting the website of the AMC.

• Create an account with the AMC
• Complete your eKYC by submitting PAN and Aadhaar details
• Specify the amount you want to invest and the frequency of your investment
• You may give online instructions to your bank to transfer the requisite amount to the fund house on a specified date.

You may invest in debt funds through an online platform such as cleartax invest. You have to log on to cleartax invest and pick the mutual fund house and the debt scheme. You then select the amount and the mode of investment as One Time or SIP to commence investing in the debt fund.

How to invest in elss mutual funds online?

You may invest in regular plans of ELSS through a mutual fund distributor. You can invest in the direct plan of the ELSS mutual fund online directly with an AMC. You must create an account with the AMC. Fill up the application form with personal details such as name, mobile name and so on.

You may complete your eKYC by submitting your PAN and Aadhaar details. You may give online instructions to your bank to transfer the requisite amount to the fund house on a specified date and start investing in the ELSS mutual fund.

You may invest in ELSS mutual funds online through online platforms such as cleartax invest.

Log on to cleartax invest.

You must pick the mutual fund house from the list of fund houses

Select the ELSS mutual fund scheme based on your investment objectives and risk tolerance and click on Invest now

Select the amount you plan to invest in the ELSS mutual fund scheme and the mode as either One Time or Monthly SIP.

How to invest Rs 500 in mutual funds?

You may invest in direct plans of mutual funds either online or offline. You must complete your KYC before investing in mutual funds. However, you may invest in regular plans of mutual funds through a mutual fund distributor.
You may consider investing just Rs 500 per instalment in an SIP of a mutual fund. It is a method of investing regularly in a mutual fund scheme of your choice.

How to invest in large cap mutual funds?

You may invest in direct plans of large cap mutual funds either offline or online by investing directly with the AMC. Complete your KYC by submitting self-attested identity and address proofs or eKYC for online mode. You could invest in regular plans of large cap mutual funds through a mutual fund distributor.

You may invest in large cap funds through online platforms such as cleartax invest.

Log on to cleartax invest.

You must opt for the mutual fund house from the list of fund houses

Select the large cap mutual fund based on your investment objectives and risk tolerance and click on Invest now

Select the amount you plan to invest in the large cap fund and the mode as either One Time or Monthly SIP.

How to invest 1 crore in mutual funds?

You may invest Rs 1 crore in a direct plan of a mutual fund. You may invest online or offline directly with the AMC. However, you must complete your KYC before investing Rs 1 crore in the mutual fund.

You may invest Rs 1 crore in mutual funds through an online platform such as cleartax invest. You just have to log on to cleartax invest and select the mutual fund house and the scheme. You then select the amount and the mode of investment as One Time if you want to put a lump sum amount in a mutual fund.

However, it would be prudent to invest in mutual funds through SIP instead of putting Rs 1 crore through a one time investment. It is a method of investing small amounts regularly in a mutual fund scheme of your choice.

How to invest in money market mutual funds in india?

You may invest in direct plans of money market mutual funds either offline or online by investing directly with the AMC. You must complete your KYC by submitting self-attested identity and address proofs. You must complete eKYC for the online mode of investing in money market mutual funds by submitting PAN and Aadhaar details. You could invest in regular plans of money market funds through a mutual fund distributor.

You may invest in money market mutual funds through online platforms such as cleartax invest.

Log on to cleartax invest.

You must opt for the mutual fund house from the list of fund houses

Select the money market mutual fund from the category of debt funds based on your investment objectives and risk tolerance and click on Invest now

Select the amount you plan to invest in the money market mutual fund and the mode as either One Time or Monthly SIP.

How to invest in STP mutual funds?

A systematic transfer plan or STP allows you to periodically transfer (switch) a certain amount of units from one mutual fund scheme to another mutual fund scheme of the same mutual fund house. You may consider an STP from an equity scheme to a debt scheme or vice versa depending on the market conditions.

You may invest in STP in mutual funds through the following steps:

You may fill up your STP form and submit it at the office of the AMC. You could fill this form online at the website of the mutual fund house.

Select the mutual fund scheme (destination fund) where you intend to invest for the long-term.

You may then select the mutual fund scheme (source fund) where you want to invest the lump sum amount.

You may choose the time-frame from where the lump sum amount invested may be moved to the destination fund. You can choose daily, weekly or monthly STPs according to your convenience.

How much money do you need to invest in mutual funds?

Systematic Investment Plan or SIP is a method of investing in mutual funds. You may invest a fixed amount regularly in a mutual fund scheme of your choice. You can invest just Rs 500 per instalment in a mutual fund through the SIP.

How to invest in mutual funds in the name of minors?

You can invest in mutual funds in the name of a minor child. The minor child is the sole holder in the mutual fund folio. The guardian for the mutual fund folio must be a parent or a court-appointed guardian.

You may approach the branch of an AMC.

Submit documents showing the child’s date of birth such as passport or birth certificate while opening a mutual fund folio. You also need documents to establish the relationship between the minor child and the parent/guardian. (For parent it could be the passport and for the guardian it is the copy of the court order)

The parent/guardian must be KYC-compliant to invest in mutual funds in the name of minor child

You can even register an SIP or STP instruction in the mutual fund folio of a minor child. However, it would cease once the minor child turns 18 years of age.

How to invest in mutual funds for the short term?

You may consider investing in mutual funds depending on investment objectives and risk tolerance. Invest in debt funds to meet your short-term financial goals. You can invest offline or online in direct plans of debt mutual funds with the mutual fund house.

However, you may invest in regular plans of debt funds through a mutual fund distributor. You can invest in debt funds through an online platform such as cleartax invest.

How to invest Rs 10,000 in mutual funds?

You can invest in mutual funds offline or online through a mutual fund house or an intermediary (broker). You may also invest in mutual funds through an online platform such as cleartax invest.

Log on to cleartax invest to put Rs 10,000 in mutual funds

You must opt for the mutual fund house from the list of fund houses

Select the mutual fund scheme based on your investment objectives and risk tolerance and click on Invest now

Select the amount you plan to invest in the mutual fund and the mode as One Time to invest Rs 10,000 in mutual funds.

How to invest in gold through mutual funds?

You may invest in Gold ETFs or gold funds either online or offline directly with a mutual fund distributor. You can also invest in these funds with the help of a mutual fund distributor.

However, you may consider investing in gold funds or Gold ETFs through the SIP route. You may invest just Rs 500 per instalment. You can invest in Gold ETFs and gold funds through online platforms such as cleartax invest.

How to invest in mutual funds for retirement?

You may invest in equity funds or ELSS mutual funds for retirement. You must invest in equity funds for the long-term to achieve long-term financial goals such as retirement planning.

You may invest in direct plans of equity funds and ELSS through an asset management company. However, you could consider investing through a broker for regular plans of these mutual funds.You could invest in equity funds and ELSS through online platforms such as cleartax invest.

How much to invest to get 3,00,000 in 3 years in mutual funds?

You may invest a lump sum amount in mutual funds or even through the SIP route. You can invest just Rs 500 per instalment in the mutual fund scheme of your choice through the SIP. Consider using ClearTax Mutual Fund Returns Calculator to determine how much to invest to get Rs 3,00,000 in 3 years.

How to invest in mutual funds in Canada?

You may consider investing in a fund of funds that puts money in Canadian mutual funds. You may approach a mutual fund house which offers the requisite facility.

How to invest in International Mutual Funds?

You may invest in International Mutual Funds directly through an AMC in India. It is an Indian mutual fund scheme which invests in stocks of foreign companies. However, you may consider the fund of funds schemes which invest in foreign mutual funds or whose portfolio mimics a stock market index such as the Nasdaq 100 or S&P 500.

You can invest in International Mutual Funds through an online platform such as cleartax invest.

Log on to cleartax invest

You must opt for the mutual fund house from the list of fund houses

Select the International Mutual Fund under the category ‘Equity’ based on your investment objectives and risk tolerance and click on Invest now

Select the amount you plan to invest in the mutual fund and the mode as One Time or SIP.

How to invest in mutual funds as a student?

You can easily invest in mutual funds if you are a student above 18 years of age. You may invest in direct plans of mutual funds through the AMC. You can also invest in regular plans of mutual funds through a broker.

However, you must complete your KYC by submitting a self-attested identity and address proof and passport size photographs at the branch of the mutual fund house. You may complete eKYC online by submitting your PAN and Aadhaar details before investing in mutual funds.