Compare & Buy Car, Bike and Health Insurance Online - InsuranceDekho
Track & Policy DownloadLogin

Are Mutual Funds A Good Option For Retirement Planning?

Most people put off retirement planning because they believe they have plenty of time to save and plan for their retirement. People only realise their error of not working on retirement plans sooner when they are reaching retirement, which disrupts their financial independence. Retirement planning should begin in the late twenties, or at the very least by the early thirties. The actual rate of return on long-term plans like retirement is affected by a variety of financial factors such as inflation, interest rates, growing medical expenditures, and so on.

The return on investment, according to industry experts, is one of the most essential aspects of wealth building. This is where mutual funds come in handy, since they provide exposure to a variety of asset classes and subclasses, allowing investors to earn higher returns on their investments. To know and understand more about mutual funds being a good option for retirement plans in one’s life, read on.

Are Mutual Funds A Good Option For Retirement Planning?

What Are Mutual Funds Exactly?

A mutual fund, as the name implies, is a pooled investment vehicle in which participants' money is pooled together and then invested in a number of vehicles. Stocks, indexes, bonds, and a variety of other assets or securities are examples. A mutual fund can sometimes invest in a combination of all of these. The mutual fund investments are made in accordance with the goals set forth in the offer document. If the fund is equity-oriented, for example, the majority of its assets will be invested in equities.

How Do Mutual Funds Function?

Consider a mutual fund to be a trust or an "endowment" that collects money from investors with similar goals and invests it to make money. The profits received from the investment are then redistributed among investors by the fund. For managing and investing your money, the mutual fund provider will charge a nominal fee.
Investing in mutual funds can help you save time and money by streamlining the investment process. Rather than poring through financial and market news and stressing over which asset classes to invest in, you just give your money to expert asset managers, who will invest it in investments that match your overall risk tolerance and goals.

What Are The Types Of Mutual Funds?

Mutual funds, like other financial vehicles, are greatly differentiated. You have a wide range of funds to pick from when it comes to investing. Your investing goals or objectives might help you choose the right fund. Are you searching for a short-term or long-term investment, for example? The level of risk varies based on the mutual fund type selected.

Following are the types of mutual funds -

  1. Money Market Funds - Money market funds are usually low-risk investments. Treasury bills, certificates of deposit (CDs), and government bonds are examples of fixed and short-term securities.
  2. Equity Funds - Stocks or equities are the investments of these mutual funds. They are often higher-risk investments since they use money markets to build your money faster. There are even more differences between equity funds. Income funds, growth stocks, large-cap stocks, small-cap stocks, mid-cap stocks, and value stocks are among the options. The equity fund might potentially invest in a mix of these options.
  3. Balanced Funds - Balanced funds invest in a combination of fixed income and equity securities. Mutual fund managers would strive for a balance that will provide you with the optimum returns. To lessen the danger of losing your money, the money is usually divided among numerous types of investments. Balanced funds are much less hazardous than equity funds, but they still have some risk depending on how they are managed. Balanced funds that are more aggressive will invest more in stocks, while those that are less aggressive will invest more in bonds, but at a lesser rate of return.


At any stage of life, a professional fund manager can assist you in developing a portfolio of assets that you are comfortable with. It may be as simple as asking around to find the correct fund manager.

Also Read: What Are Some Benefits Of Early Retirement Planning?

Some Retirement Planning Tips You Must Know About

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

Popularly Opted Term Insurance Sum Assured

People Also Read

Must BuyMust Buy

Why to Buy Life Insurance Policy Online from InsuranceDekho

  • Tax benefit upto 1,50,000*
  • Claim support everyday 10AM-7PM
  • 80 Lacs+ happy customers