Best Mutual Funds to Invest for Retirement

Whether you expect to receive a decent pension post-retirement or look forward to leaning on your savings alone, mutual funds are the only investment instrument that can help you build a sizeable corpus for a comfortable post-retirement life. Why? Mainly because they beat the demon of inflation.

However, you don't need to exclusively invest in funds that come with the 'retirement tag.' These funds are usually hybrid and most come with a lock-in period. If you're a disciplined investor, you can also invest in an open-end diversified scheme. Construct your retirement portfolio with a mix of equity and debt funds, rebalancing it down the line based on your risk profile and investment goals.

If you're starting early, go for aggressive equity funds; if not, dedicated retirement funds are your safest best. Nevertheless, here's a mix of the top mutual funds you should consider for your retirement portfolio.

List of Best Retirement Funds in India for 2024

Here is a list of the best retirement funds in India in 2024 based on their 3Y returns:

Debt funds

Are you a conservative borrower? Then consider investing in debt-based funds, wherein a significant portion of the assets are invested in fixed income securities such as treasury bills and bonds. However, keep in mind that these funds work best for the short or medium-term goals.

Given your investment objective, your investment horizon will naturally be long-term (at least 7 to 10 years). So, a good time to increase the share of these funds in your portfolio would be around the time you're nearing your retirement, as they will offer stable returns and act as a hedge against volatility.

Additional Read: How to Select the Best Funds to Invest in Mutual Funds Online?

Equity funds

Due to rising investor consciousness, many start planning and investing for their retirement in their 20s and 30s. If you're in this lot, you have a good 20+ years to meet your investment goal. In that case, equity mutual funds, which invest a greater portion of their assets in equity and equity-related instruments, are your safest bet despite being highly risky. Why? Because the longer the horizon, the higher the returns they can generate.

Aggressive hybrid funds

Aggressive hybrid funds invest in both equity and debt instruments in proportions specified by an individual scheme's investment objective. They are more efficient at generating wealth as opposed to vanilla balanced hybrid funds because these can take advantage of arbitrage opportunities. At least 20% of the assets are to be allocated towards debt instruments, while up to 80% can be reserved for equity instruments.

Again, if you're starting early, you should have aggressive hybrid schemes in your retirement portfolio. But it's recommended that you reduce the share of these schemes as you approach retirement.

Additional Read: What All Needs to Take into Consideration while Investing in Mutual Funds

Factors to consider before investing in mutual funds for retirement in 2024

Investing in mutual funds for retirement requires careful planning to ensure your future financial security. Here are some crucial factors to consider:

1. Risk appetite

Assess your comfort with risk based on your age, financial situation, and comfort with handling market fluctuations. For instance, younger investors can afford higher-risk funds like equity mutual funds, while those nearing retirement may prefer stable options such as debt or hybrid funds.

2. Investment goals

To make the right investment choices, align your retirement goals to the objectives of the mutual fund to ensure wealth creation. Define your retirement goals, desired lifestyle needs, the age you want to retire, and any major expenses such as travel or medical costs.

3. Time horizon

Your investment duration until retirement impacts fund selection. A longer horizon favours equity funds, as they tend to outperform over time, while shorter periods benefit from less volatile investments.

4. Fund performance

Evaluate the historical performance of funds, but remember past performance isn't a guarantee for the future. Look for consistency and alignment with your retirement goals.

5. Tax efficiency

Consider funds with tax benefits or minimal tax implications, especially under long-term capital gains.

Bottom line

In conclusion, always make sure the funds you choose for your retirement portfolio align with your investment needs, especially your risk profile and investment horizon, to get assured and substantial returns. Start planning for your post-retirement life with the Moneyfy's mutual fund app. Choose the goal-based investing option, enter your personal investment requirements, and the app will suggest to you the top funds tailored to your needs.

Browse through the different fund options, compare between each, and make an informed choice. Securing your future begins with Moneyfy - start today!

FAQs on Retirement Funds in Mutual Funds

What is the best type of mutual fund for retirement?

Equity mutual funds are considered ideal for retirement due to their long-term growth potential. Over time, these funds can offer better returns to outpace inflation. However, the best mutual fund ultimately depends on your investment horizon, risk appetite, and retirement goals.

Which mutual fund is best for a retired person?

For retirees, debt mutual funds like short-duration or hybrid funds are suitable, offering stable returns with lower risk compared to equities. These funds can generate regular income while preserving capital.

Which SIP is best for retirement in India?

SIPs in equity funds is great for long-term retirement planning. They provide good growth potential and can compound wealth over time, especially if started early.

Which investment is best for retirement?

For retirement, mutual funds (equity or hybrid), Public Provident Fund (PPF), and the National Pension Scheme (NPS) are great options, ensuring long-term growth and regular income in retirement.