Best Mutual Funds for Senior Citizens

According to UNFPA India, one-fifth of the growing senior population lacks regular income, highlighting the need for reliable retirement planning. Mutual funds (MFs) are gaining popularity for senior citizens looking for financial stability and additional income. They include low-risk investment, minimal investor effort, and complete transparency.

In this article, we’ll explore the best mutual funds for senior citizens, why they are a good option, and what to keep in mind before you invest. 

Why Choose Mutual Funds as an Investment Option for Senior Citizens?

Mutual funds offer the following benefits for senior citizens:

• Financial security through steady returns

• Low-cost investment with Systematic Investment Plans (SIPs)

• Tax savings under Section 80C of the Income Tax Act for Equity Linked Savings Schemes (ELSS)

• A diverse investment portfolio for better risk management

• Easy access to funds for quick and urgent withdrawals.

• Transparent reports regarding investment usage and performance.

• Professional management of investments by fund managers, saving time and effort 

Which Types of Mutual Funds are Best for Senior Citizens?

A few types of the best MF for senior citizens are:

1. Retirement-specific funds

Moderate-risk funds that help finance retirement requirements with good returns and prolonged security.

Best for: Building a retirement corpus. 

2. Liquid and debt funds

Low-risk, short-term investments that provide quick returns and easily accessible funds required for emergencies.

Best for: Emergencies and regular income.

3. Tax-saving ELSS funds

Funds with a three-year lock-in period, which results in tax benefits and long-term financial growth.

Best for: Tax savings with equity exposure.

4.Balanced advantage funds

Funds that change investment assets between debt and equity based on market risks for optimal returns. 

Best for: Conservative growth. 

5. Mid-cap and small-cap funds

High-risk, long-term investments in small-to-mid-size companies for large returns.

Best for: Aggressive investors/long-term wealth creation.

What Key Factors to Consider When Choosing Mutual Funds for Senior Citizens?

These are some essential things to consider before investing your money in the best mutual funds for senior citizens:

• Risk levels: Invest in moderately risky or low-risk funds for easy management and increased long-term financial security. 

• Diversification: Diversify across fund categories to balance safety, liquidity, and growth.

• Transparency: Select funds that provide thorough disclosure on returns, expenses, tax effects, and the way your money is being spent. 

• Minimal fees: Choose funds with lower expense ratios to maximise returns.

• Affordable investment: Choose funds that allow you to invest small sums regularly (SIP) and withdraw without difficulty (Systematic Withdrawal Plans (SWPs)), if necessary.

• Form 15: Submit this if your income is less than the taxable threshold (3 lakhs for 60-80 years, 5 lakhs for 80 years and above) to be exempted from TDS.  

Conclusion

Retirement doesn’t have to mean financial slowdown. Mutual funds are an easy and safe means of generating additional income in your retirement years. 

To explore top-performing mutual funds that meet your needs, download the Tata Moneyfy App or visit our website. Compare, buy mutual funds online, and track your funds all in one place.