When you start earning, the first thing that you think about is to earn enough money to enjoy a happy and contended present. But gradually you start thinking about your future and worrying about the retirement solutions. Retirement is an important phase of life and everyone dreams of leading a healthy and happy life after retirement. The standard retirement age in India is 58 although there are many who opt to retire early or late due to different financial reasons.
A peek into Indian Retirement Plans
Retirement plan in India is supported by three factors- The first is the universal basic pension system, the second is the mandatory occupational pension system and the third is the voluntary plan like individual retirement schemes.
According to latest records, India has approximately 90 million people above the age of 58 years out of which around 7 million individuals receive pension from different government bodies. The first factor includes schemes like the National Social Assistance Program which offers pension to elderly and government staffers.
The second factor includes the Employees Provident Fund Organization (EPFO) which manages around 45 million people out of which 12% work under organized sectors and the remaining 88% have no formal retirement plan.
The last factor is limited to schemes like Provident Fund (PPF), some insurance companies and private pension plans. PPF manages around 3 million Indians and pension plans have around 1.6 million investors. All these figures show that the financial situation of people in India is very gloomy. It is expected that the population of people above the age of 58 years will be more than 200 million by 2030. So, it is advisable that instead of waiting for
legislative reforms people should start investing in available plans for retirement.
Benefits of Mutual Funds in Retirement Plans
Investing in mutual funds can be a lucrative tool for a happy retirement. It is an easy and inexpensive way you can build a diverse assortment of stocks and bonds for your retirement. In mutual funds you invest your money with financial institutions who further invest the money for buying bonds, stocks and cash. A professional investment manager looks after the buying and selling of stocks and bonds for the most effective growth of the funds. Being an investor, you become the shareholder of the mutual fund company. Mutual funds can prove very beneficial in retirement plans. Some of the benefits are-
Mutual funds invest in diverse range of securities which reduces the risk for investor. The possible decline in one value of security reduces the investment risk.
With mutual funds you can participate in diversified securities with less investment.
A long term investment gives you good returns at the time of retirement.
Mutual funds can be sold or bought on any market day.
Looking the at the current investment scenario of our country, there is a constant need to increase the financial literacy. The benefits of mutual funds should be bought into attention so that under invested Indians can prepare effectively for their retirement.
To know more about the effective retirement solutions, you can contact us and seek professional financial advice.