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Mutual Fund for Senior Citizens
24 Jul 2023

One must constantly make money work for them, regardless of age. With ageing being a key barrier for elderly individuals, it is critical to choose the idle investment funds in India. Senior citizens may pick from a variety of investing opportunities. However, what works for one investor may not work for another. As a result, before selecting the ideal investment plan for elderly persons in India, it is critical to understand the numerous investment possibilities accessible to them. 

Mutual Funds For Senior Citizens

Mutual funds (MFs) are diversified investment pools in which investors' money is invested in assets such as ETFs, bonds, stocks, and debentures. They are tied to the performance of the market. One of the most significant benefits of mutual funds is that the money of investors is handled by a professional fund manager. Mutual funds may be purchased as a one-time lump amount or via a SIP. Notably, Mutual Funds are regarded as a flexible investing alternative for the elderly. Not only that, but MFs may assist older folks in hedging actual returns and beating inflation.

Senior citizens, in general, avoid engaging in risky investment schemes. This is because they are already retired and are unable to handle the losses and susceptibility that come with market-related instrument risk. They look for methods that provide assured profits. In such instances, conventional programmes such as bank fixed deposits, Post Office savings options or even national pension systems are preferred. However, what many people fail to realise is that MFs may be a valuable investment choice for the elderly owing to their many advantages. Markets do experience short-term shocks, but in the long run, the methods described here have produced higher returns than so-called traditional schemes.

Since there are various kinds of mutual funds that serve different investment demands, one should invest in mutual funds depending on their risk tolerance and investment duration. Mutual funds allow elderly individuals the freedom to design their own withdrawal strategy since, unlike NPS or any other annuity product, mutual funds do not have withdrawal limits. Furthermore, mutual funds enable older folks to build a customised diversified portfolio across asset classes that meets their specific requirements.

Seniors should invest the money needed for the first five years in a Debt Mutual Fund. Balanced Mutual Funds may be used to invest money needed for routine needs over the following five years. Additionally, capital that will be needed after 10 years might be invested in small or mid-cap funds. It is also recommended to visit a financial adviser who can provide recommendations depending on the investor's risk tolerance and other post-retirement plans. Gratuity enables you with the power to invest amounts after retirement. Estimate your retirement benefits with gratuity calculator.

Having some equity exposure via equities mutual funds can assist elderly folks beat inflation on their total portfolio. Mutual fund interest rates are connected to market movements. MFs, on the other hand, manage to hedge returns under volatile situations since an investor's portfolio is spread among a variety of assets.

According to AMFI statistics, SIP inflows totalled Rs 12,693 crore in August. Notably, SIP inflows have been above the Rs 12,000 threshold since May of this year. SIP investment was at Rs 12,139 crore in July. In August, the global mutual fund sector had a high inflow of around Rs 65,077.46 crore —- up 2.75 times over the previous month's inflow of Rs 23,604.92 crore. While debt-oriented schemes performed best, with an inflow of Rs 49,164.29 crore compared to a meagre Rs 4,930.08 crore in July. Investment in equity-oriented plans, on the other hand, fell to Rs 6,119.58 crore in August from Rs 8,898.2 crore in July of this year. Overall, asset under management (AUM) reached a new high of Rs 39,33,877.77 crore in August 2022, up from Rs 37,74,802.90 crore in July 2022.

Last month, AMFI said that SIP is a mutual fund investment plan in which one may invest in a mutual fund Scheme on a regular basis rather than making a one-time investment. The monthly SIP instalment amount might be as little as Rs 500. SIPs are similar to recurrent deposits in that you deposit a small/fixed sum each month.

Furthermore, AMFI noted that SIP is a highly handy way of investing in mutual funds by setting up standing instructions to debit your bank account every month, eliminating the need to write out a check each time. Bank fixed deposits now provide elderly people interest rates ranging from more than 3% to slightly more than 7%. Meanwhile, the government recently increased the Post Office Senior Citizen Savings Scheme interest rate to 7.6%, effective 1st Oct. Whereas, an investor in the NPS might earn between 9% and 12%.

Wrapping Up

As investors approach retirement age, the majority of their financial obligations have been met. Furthermore, the majority of them would have prepared for retirement. All they want is an extra source of regular income to compensate for income loss after retirement. Furthermore, they must consider capital appreciation as a kind of progress.

At this point, investors are unwilling to incur any greater risk in order to gain an additional rupee. Even at the age of 60, some investors have a high risk tolerance. The ideal investment strategy for older folks will enable them to receive a consistent source of income while also benefiting from capital growth. As a result, older folks should choose the greatest investment alternatives in India that meet their needs. Financial professionals advise investors to make educated judgments based on their understanding of the numerous investment possibilities accessible. Open a Demat account today or invest in any upcoming IPO with ease. Online platforms provide for speedy completion of tasks. It is also simple to trade and invest in stocks online in order to quickly increase your wealth. However, this requires some effort, including finding stocks to invest in and recognising your points of entrance and exit.


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