What are retirement mutual funds? Know the key features
Retirement planning is a subject that has become the focus of growing attention as financial uncertainty keeps rising in modern life. Since retirement planning is essentially long-term, these investment options are in the long-term.
Kolkata: There is hardly a should who is not bothered with life's expenditure after retirement. It is a time when work stops and so does your salary. Unfortunately, expenditure doesn't stop and since one's health usually begins to fail in the later years, healthcare expenditure zooms for many. A large number of individuals invest in many assets for wealth creation for use in later life. Mutual funds, which have turned out to be a preferred route for investing with a growing number of Indians, is one of them.
It is with a view to providing this solution that prominent asset management companies offer retirement funds. Retirement funds often bear lock-in periods. The driving logic is, since retirement funds are typically for the long-term, this period dissuades the investor to take out money for at least five years or until retirement age, whichever comes earlier. Who doesn't know that the power of compounding is unleashed in its brutal best only in the long term.
This means you cannot withdraw your money for a specific duration, usually five years or until retirement age, whichever comes later. This lock-in period is designed to encourage long-term investment and help investors benefit from the power of compounding.
Key features of retirement mutual funds
Retirement funds are essentially for the long haul that is basically designed to match the retirement plans of an individual. Retirement funds also need stability as a basic feature. Therefore, most retirement funds spread investors' assets in different asset categories such as stocks, bonds and sometimes even real estate. It is obvious the inclusion of bonds is deigned to balance risks and potential gains over the long term and serves the purpose of growth and stability. Investments in some retirement funds are also tax deductible. However, one must be in the old tax system since the new one does not offer such deductions.
Therefore, if an individual has a certain degree of risk appetite, one can consider retirement mutual funds to create for the future. When the investor reaches the age of retirement, these funds can offer the option of receiving monthly or quarterly payouts. These can provide with a regular cash stream.
Some of the high return generating funds in 5 years
Let's have a look at some of the retirement funds that have generated higher returns over the past 5 years. These are annualized returns.
ICICI Prudential Retirement Fund - Pure Equity Plan: 32.16%
HDFC Retirement Savings Fund - Equity plan: 28.97%
Tata Retirement Savings Fund: 21.27%
HDFC Retirement Savings Fund - Hybrid Equity: 21.48%
Nippon India Retirement Fund- Wealth Creation Scheme: 24.26%
ICICI Prudential Retirement Fund - Hybrid Aggressive Plan: 24.51%
Please note that these data pertain to June 30, 2025.
(Disclaimer: This article is only meant to provide information. News9 does not recommend buying or selling shares or subscriptions of any IPO, Mutual Funds, precious metals, commodity, any form of alternative investment instruments and crypto assets.)