‘To create and grow wealth, equity mutual funds are a good vehicle’

Coimbatore:Factors such as risk appetite of an investor, targetted retirement age, and post-retirement withdrawal plans should be taken into account while designing a plan for a retirement corpus, said the participants of a panel discussion organised in Coimbatore on Friday as a part of an investors conclave on the theme: “Retire with confidence” by the BL Portfolio, businessline, in association with LIC Mutual Fund.

Moderated by Aarati Krishnan, Consulting Editor of The Hindu businessline, the panel deliberated on multiple issues related to planning for a retirement corpus.

• Read: Create a retirement corpus that covers longevity and inflation

Equity mutual funds

Dikshit Mittal, Fund Manager and Senior Equity Research Analyst, LIC Mutual Fund, said the official inflation rate is 6 per cent. Employees Provident Fund offers 7 - 8 per cent returns. By investing in PF, the investor is preserving wealth. To create and grow wealth, equity mutual funds are a good vehicle. Starting equity SIPs at a young age can help meet lofty retirement targets. Equity as an asset class gives inflation-beating returns. A combination of factors such as the age of the investor, risk appetite, when he or she will retire, etc., are important while designing retirement plans. It is also important to have a systematic withdrawal plan, he said.

According to Ravi Saraogi, Co-founder of Samasthiti Advisors, those who start planning at a young age for retirement need a diverse portfolio. They should have debt investments too to account for the unknown. It allows them to take risks. And, closer to the retirement age, it is important to do portfolio rebalancing and have a mix of asset classes. It will also be ideal to fixate on a safe withdrawal rate. The living expenses after retirement should be calculated, he said.

Saraogi said most people in India retire at the age of 60. They should calculate the annual expense for the first year of retirement and multiply it 33 times for the corpus that should be built.

Senior Partner of Kumbhat & Co, Sheilendra Bhansali, recommended that investments in savings should start the day a person starts earning. The corpus for retirement should look at equities and mutual funds. As for a salaried person, a self-employed person should also have investment discipline. He suggested having 7separate maintenance and growth corpus and writing a will, however, big or small the wealth is.