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What are Mutual Fund Retirement Schemes?

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SMFS was featured in today’s (01/10/2018) edition of Mint under the Expert Speak initiative by UTI Swatantra, answering a reader’s question – What are Mutual Fund retirement schemes?

Link to the epaper.

To extend this further –

These days with increased pensions, a lot of retired citizens fall under a high tax bracket; which makes investing in fixed deposits less beneficial as they are not tax efficient. Hence, they should invest in Long Term Accrual funds/FMPs with a 3 year plus time horizon as these will give them much better returns after the indexation benefit.

For someone who does not have the benefit of a regular pension, he/she can invest:

  • Smaller amounts in Liquid/Short term debt funds and use a monthly SWP (systematic withdrawal plan) to take care of their monthly expenses
  • The major chunk of their money in long term investments for better returns

Similarly, when we recommend investors to start SIPs in equity schemes at an early age to take care of their retirement, upon retirement, they can use SWP (Systematic Withdrawal Plan) even from these equity schemes to take care of their expenses.