How to build the pension corpus with mutual funds?

A mutual fund is a professionally managed company that collects money from many investors and invests it in securities such as stocks, bonds and short-term debt, equity or bond funds and money market funds.

Mutual funds are a good investment for investors looking to diversify their portfolio. Instead of betting everything on one company or sector, a mutual fund invests in different stocks to try to minimize portfolio risk.

The term is typically used in the US, Canada and India, while similar structures around the world include the SICAV in Europe and the open-ended investment firm in the UK.

How to build the pension corpus with mutual funds?

Most people don’t realize that their retired life can be as long as their working life and they will need a huge corpus to last at least 25-30 years. Without proper financial planning, your savings may not be enough to cover all expenses and emergency needs. But how do you build a corpus to support 25-30 years of life in retirement? First, find out what your annual expenses will look like after retirement using our inflation calculator and decide on the total corpus you’ll need to sustain 25-30 years of your retirement life. Once you have the retirement corpus in mind, you can use our Goal SIP Calculator to get to the monthly SIP investments you need to start now to be able to build the corpus, you got on top, during your working years. The advantage of investing in mutual funds via SIP is that it doesn’t pinch your portfolio and can be managed from your monthly income.

Next, choose a few mutual fund schemes for long-term growth depending on your risk appetite. While equity funds are recommended for the long term, you can choose debt or hybrid funds as well. Align your return expectations with the category and type of mutual fund schemes you choose.

Well started is half done. By bringing discipline early in the best possible way, it will take less effort to achieve your financial goal of a happy life in retirement.

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