Exciting mutual fund investment plans for youMutual fund investment plansRetirement is that phase of an individual when his active stage of earning comes to an end, and it is when he or she should make the best use of his retirement benefits. Retirees should make the best use of their retirement corpus so that they can invest wisely, and yet remain tax-free. But, investment along with a steady income is the biggest challenge faced by most of the retirees.
One of the best options for a retired person is SIP – Systemic investment Plan. In this article, we suggest some convincing reasons for you to consider investing in SIPs.What is Systematic Investment Plan?Systematic Investment Plan is an investment strategy wherein an investor invests the same amount of money in a particular mutual fund at every stipulated time period. This is something similar to the Cumulative or Recurring Deposit account in a bank.
What are the advantages of SIP?· It enables a person to make Mutual fund investment plans in a easy manner, and be assured of steady income.· It allows you to invest a small amount of money every month without your having to make a onetime heavy investment.· The SIP is a better investment avenue as it provides you higher returns.· Today, many retired persons live in their own lifestyle by using their savings and investment returns.· SIP offers ideal investment for retirement planning as these mutual funds offer tax free or low-tax returns.Types of Systemic Investment Plans1. Money Market FundsMoney Market Funds are mutual funds that invest in commercial papers, commercial bills, treasury bills, certificate of deposits, and other instruments specified by the Reserve Bank of India. These funds have a minimum lock-in period of 15 days.
2. Fixed Income Funds Fixed Income Funds are mutual funds that invest funds in a combination of government securities such as government bonds, certificate of deposits, corporate bonds, and money market instruments that pay a fixed rate of return. 3. Equity Funds Equity funds are mutual funds that invest their funds in stocks. Equity funds tend to grow faster than money market and fixed income funds, but you stand a risk of incurring a loss.
4. Balanced Funds A balanced fund is a great option for medium-term investors. As the name indicates, Balanced Funds, which invest funds in a mix of equities and fixed income securities, are often called hybrid funds. Normally, these mutual funds try to maintain a balance of the funds by keeping about 60% of their investment in stocks and the remaining in bonds.
5. Index Funds Index Funds are mutual funds that are planned to track the market returns index. An index can be said to be a group of securities that represents a specific market segment.
The value of the mutual fund fluctuates according to the market index. One of the advantages of Index Funds are that they are passively managed and incur low costs, resulting in a higher return in the long run. 6. Specialty Funds Specialty Funds are a type of mutual fund that invest only in a specific sector of the economy that aims at development of the country, environment protection, and socially responsible sectors.
Most of the Specialty Funds avoid investing in alcohol, tobacco, and gambling sectors. 7. Fund-of-Funds While mutual funds do direct investment, Fund-of-Funds involves itself in an investment strategy by holding portfolio of other investment funds rather than invest directly in stocks, bonds, or securities. This type of investment is also known as multi-management investment. Now, that you have a fair idea of the Systemic Investment Plans and mutual funds, there is no reason for you to delay your retirement planning. So, go ahead and make that investment – Today!.