Thinking of retirement? Know which fund works for you

When we’re young, most of us prepare and plan for retirement. This tendency to save and invest towards retirement should not stop even when we’re reaching our goal. However, there should be a shift in pace and risk appetite. As you approach your non-working phase of life, it’s essential to focus more on conserving your corpus rather than expanding it.

You have to construct a set path for your financials given that you will have to live on a fairly limited income. There are a number of possible investments and strategies that retirees can use to help extend their savings and allow them to enjoy their retirement and maintain their lifestyle. In this article, we will look at the various mutual funds that will be fruitful as investors near retirement.

There are many categories and sub-categories of mutual funds. Many of them may not be suitable for investors at the cusp of retirement.

However, there are a few that may work with a retiree’s portfolio. They are-

1. Liquid fund: Liquid funds invest your money in liquid assets for short period of time. They have high liquidity, which makes it easy for investors to convert the assets invested into cash. The residual maturity of liquid funds is less than or equal to 91 days. If you have dormant cash reserves and would like to earn some interest in them, then liquid funds are a way to go.

2. Debt funds: As the name suggests, these funds invest in a mix of debt or fixed income securities such as treasury bills, government securities, corporate bonds, and money market instruments. Generally, debt securities have a definite maturity date & pay a fixed rate of interest. These funds also offer indexation benefits if the units are held for over three years.

3. Short duration funds: These are as sub-set of debt mutual fund schemes, which invest in commercial papers, certificate of deposits, money market instruments, etc. The Macaulay duration of the scheme is 1-3 years. These funds tend to be less vulnerable to interest rate risk. They have scope to give stable returns.

4. Hybrid funds: The objective of these funds is to provide a balanced mixture of safety, income and capital appreciation. These funds invest your money in different assets like equity, debt market, money market and gold schemes. Broadly, there are two kinds of hybrid funds- equity-oriented hybrid fund and debt- oriented hybrid fund. Those nearing retirement may go for relatively conservative schemes.

Disclaimer
Source:.
This document represents the views of Axis Asset Management Co. Ltd. and must not be taken as the basis for an investment decision. Neither Axis Mutual Fund, Axis Mutual Fund Trustee Limited nor Axis Asset Management Company Limited, its Directors or associates shall be liable for any damages including lost revenue or lost profits that may arise from the use of the information contained herein. No representation or warranty is made as to the accuracy, completeness or fairness of the information and opinions contained herein. The material is prepared for general communication and should not be treated as research report. The data used in this material is obtained by Axis AMC from the sources which it considers reliable.

While utmost care has been exercised while preparing this document, Axis AMC does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Investors are requested to consult their financial, tax and other advisors before taking any investment decision(s). The AMC reserves the right to make modifications and alterations to this statement as may be required from time to time.

Statutory Disclaimer: Axis Mutual Fund has been established as a Trust under the Indian Trusts Act, 1882, sponsored by Axis Bank Ltd. (liability restricted to Rs. 1 Lakh). Trustee: Axis Mutual Fund Trustee Ltd. Investment Manager: Axis Asset Management Co. Ltd. (the AMC) Risk Factors: Axis Bank Limited is not liable or responsible for any loss or shortfall resulting from the operation of the scheme.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.