A Complete Guide to Your Retirement Planning | Nico Wealth

A Complete Guide to Your Retirement Planning | Nico Wealth

Planning for retirement is definitely a very smart move and a lot of people are starting to see its importance these days. There are undoubtedly a lot of ways you can plan your retirement. Here in this post, we will discuss one of the best ways of doing so.

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Retirement funds, also known as ‘Pension Funds’ are what we are referring to. Investing in these funds makes sure that a portion of your investments is being directed towards your retirement planning. An investor has a number of options through which he can save for his retirement. Some of them are Senior Citizens’ Saving Scheme (SCSS), Post Office Monthly Income Scheme (POMIS) Account, Tax-free Bonds, and more. Apart from these conventional methods, Mutual Funds is a pretty good retirement saving method.

Investing in a pension fund enables an investor to plan his retirement in a systematic manner so that his family and his life are secured after he gets retired.

What is the Purpose of a Retirement Fund?

The main role of a retirement savings fund is to create a consistent source of income for a financial investor when the individual in question doesn’t have a source of revenue. It very well may be considered as a type of deferred pay, giving monetary security and enough money to pay for the necessities of people.

Most pension funds offer the choice to get the profits as either a lump sum amount or a monthly annuity.


Lump-Sum Amount: Such payments disburse the aggregate sum of the wealth that is accumulated to the financial investor after the individual in question retires. It dispenses a significant monetary backing, nonetheless, eliminates the customary cause of return from month-to-month annuity payments.

Monthly Annuity: It is paid at a fixed rate, much of the time including protection for inflation. It is one of the main benefits as a financial investor gets the return from his or her retirement fund in accordance with the current denomination.

What are the Advantages of Investing in a Retirement Fund?


  1. Long-term Investment– These funds are long-term savings schemes, as their principal aim is to give a stable income after financial investors’ retirement. The scheme’s objective is to invest resources into safer securities available on the market, offering security.
  1. Benefits in taxation – Contribution towards the retirement mutual fund is permitted as a deduction up to Rs.1.5 lakh under Section 80CCC. In any case, if it’s not too much trouble, note that the withdrawals from these funds are generally dependent on the tax. Assuming that the financial investor decides to pull out as an annuity, it will draw in charge pertinent to the slab rate just like salary income.
  1. Risk-free Investment – Pension fund retirement plans are among the most secured investment modes as they convey very low-risk profiles. Financial investors who do not wish to take a higher risk have a choice to place their cash in government-supported securities for a fixed return or put resources in a hybrid fund (a mix of debt and equity) to acquire better returns.
  1. Inflation Protection – Most retirement funds offer some amount of compensation against inflation. It secures the financial investors against inflation by permitting them to pull out 33% of aggregated corpus post-retirement. The balance investment is used for a month-to-month annuity for the financial investor. A monthly annuity empowers the financial investor to keep their funds invested and return by pulling out a part of the balanced funds.
  1. Flexibility – One of the main benefits of a retirement mutual fund is that one doesn’t need to mandatorily purchase an annuity, in contrast to the case with the NPS or some other retirement insurance policies. A financial investor can decide to pull out either a lump sum amount or choose a month-to-month annuity depending upon their monetary necessities and plans.
  1. Insurance Cover-Most pension policies are known to serve as a life insurance cover, shielding their dependents from any monetary misfortune if there should arise an occurrence of fundholder’s death before retirement. Likewise, a few policies permit the withdrawal of a lump sum amount if there should be an occurrence of any health-related emergency. This can demonstrate a beneficial component of pension funds.

What are the Modes of Investing in a Retirement Mutual Fund?

There are basically two methods for investing resources into such kinds of funds; one can either decide to contribute by means of a Systematic Investment Plan (SIP) or make a one-time lump sum investment.


  • Systematic Investment Fund (SIP): SIPs include contributing a specific amount of cash consistently till a financial investor satisfies his or her financial objective.
  • Lump-Sum Investment: Lumpsum investment or a one-time investment, is a cycle where a financial investor invests a significant sum at one go. This strategy is typically liked by people with sound money savings and a higher risk appetite.

Both the mentioned processes offer specific advantages and disadvantages. For instance, SIPs are more qualified for first-time financial investors, as they teach a propensity for investing and make a pool of assets throughout a more drawn out time-frame. It permits new financial investors to capitalize on their wealth with no monetary strain. It will likewise assist them with planning their retirement benefits in a more productive way.

In the case of a lump sum investment, it guarantees altogether more significant yields with market appreciation. To be honest, they are exposed to more risks when contrasted with SIPs. It needs to be mentioned that it is because of this very reason that seasonal financial investors are more inclined toward such one-time investments.

The Conclusion:

Retirement plans presented by mutual funds are an astounding choice to plan one’s retirement. These assets have a lock-in of five years, which is much less than the lock-in time of 15 years in the government’s National Pension Scheme. These funds are well-known to offer fair returns and secure you well for your retirement days.

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