A mutual fund is a kind of investment that uses money from investors to invest in stocks, bonds or other types of investment. Mutual funds are usually open ended, meaning that new investors can join into the fund at any time. When this happens, new units, which are like shares, are given to the new investors.

The SEBI has designated these plans as a separate category so that investors can plan their retirement in a systematic manner. These solution-oriented retirement plans have a predetermined duration of 5 years or until retirement. This is an effective strategy to keep investors involved for a longer period of time in order to meet their retirement investment objectives. Investors interested in this plan should consider investing in one of the following schemes.

Best Retirement SIP Plans in India In 2021

Here are a few retirement-focused mutual funds to consider.

  • HDFC Retirement Savings Fund Equity Plan

This plan had assets under management (AUM) of 1,777 Crores, making it a medium-sized fund in its category. The funds expense ratio is 0.98 percent, which is greater than the expense ratios charged by most other Multi Cap funds. The last one-year returns for HDFC Retirement Savings Fund Equity Plan Direct-Growth are 60.08 percent. It has returned an average of 21.44 percent per year since its inception. The financial, technology, chemicals, engineering, and services sectors account for the majority of the funds assets. In comparison to other funds in the category, it has less exposure to the Financial and Technology industries.

  • HDFC Retirement Savings Fund - Hybrid Equity Plan

This plan had assets under management (AUM) of Rs. 684 crores, making it a medium-sized fund in its category. The funds expense ratio is 1.28 percent, which is higher than the expense ratios charged by most other Aggressive Hybrid funds. The fund now has a 66.08 percent stock allocation and a 15.85 percent debt allocation. The 1-year returns for HDFC Retirement Savings Fund - Hybrid Equity Plan Direct-Growth are 42.98 percent. It has had an average yearly return of 19.13 percent since its inception. The funds debt portion has a low credit rating, meaning that the borrowers to whom it has lent money are not of high quality.

Must read: Frequently Asked Questions About Mutual Funds    

  • The Tata Retirement Savings Fund Progressive Plan Direct

This plan manages assets of 1,127 crores (AUM). The funds expense ratio is 0.68 percent, which is lower than the expense ratios charged by most other Multi Cap funds. The last one-year returns for Tata Retirement Savings Fund Progressive Plan Direct-Growth are 39.79 percent. It has had an average yearly return of 17.02 percent since its inception. Every two years, the fund has quadrupled the money put in it. The fund aims to give investors with a financial planning tool for long-term financial security based on their retirement aspirations. A five-year SIP of Rs 10,000 will yield Rs 9.35 lakh, with a profit of Rs 3.35 lakh.

  • The Tata Retirement Savings Fund Moderate Plan Direct

This plan manages assets of 1,493 crores (AUM). The funds expense ratio is 0.66 percent, which is lower than the expense ratios charged by most other Aggressive Hybrid funds. The fund now has a 78.38 percent stock allocation and a 16.14 percent debt exposure. The fund aims to give investors a financial planning tool for long-term financial security based on their retirement aspirations. The recent one-year returns for Tata Retirement Savings Fund Moderate Plan Direct-Growth are 34.14 percent. It has returned an average of 16.92 percent every year since its inception.

  • Nippon India Retirement Fund - Wealth Creation Scheme

The Nippon India Retirement Fund - Wealth Creation Scheme Direct-Growth manages assets worth 2,169 crores (AUM). The funds expense ratio is 1.15 percent, which is higher than the expense ratios charged by most other Multi Cap funds. Nippon India Retirement Fund - Wealth Creation Scheme Direct-Growth returns are 48.49 percent during the last year. It has had an average yearly return of 9.34 percent since its inception. A five-year SIP of Rs 10,000 will yield Rs8.29 lakh, with a profit of Rs 2.29 lakh.

Conclusion

As the market keeps falling and you continue to invest your average cost falls. You will be buying more units at a lesser cost. The primary advantage of SIP is to lower the average cost of buying mutual funds. SIPs work well in a falling market condition or volatile markets.

Also read: Are Mutual Funds A Good Choice Of Investment?

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.            

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