Investors in the category of “senior citizens” typically have specific investment goals in mind. These include the protection of wealth, liquidity, and a regular income source. Mutual funds may not have specific funds for senior citizens, but certain funds among them can meet the needs of seniors today. Mutual funds for senior citizens include “safer” funds, which invest more in debt than equity, as this is a primary consideration for seniors.
The majority of Indian senior citizens prefer to invest in traditional investment products such as those fixed income schemes backed by the government and bank fixed deposits. You may not find a senior citizen who wishes to open a Demat account and invest in the stock market in the retirement period of life. On the other hand, there are seniors who may have invested in the stock markets previously, while they were younger, with a long-term investment perspective. When people in their golden years look for mutual funds for senior citizens, they mainly stress on factors of security in investment and the safeguarding of wealth. A regular income source is also sought, as income is sparse during retirement.
Mutual fund investment for senior citizens involves funds with low-risk, fairly decent returns and income that is regular and reliable. So what are the mutual funds you should look for if you are a senior citizen, or are planning for near retirement?
While searching for the top mutual funds for seniors, there are particular features of funds to focus on:
Ideally, a combination of the above kinds of funds would suit senior citizens the most. Analysts recommend that around 60% to 70% of any senior citizen’s investment in the mutual fund space should be in a debt fund. Equity funds may pose risks, and only a small amount of capital should be allocated to these. Mutual funds for senior citizens may vary in their ratios of wealth allocation, as seniors may have other fixed sources of income and use mutual funds for the enhancement of this. So, choosing a mutual fund in your retirement phase is a very individual decision, according to your risk potential, needs and other factors.
Here are some top schemes in the category of “mutual fund investment for senior citizens”, considering the requirements of seniors in India in 2023:
ICICI Prudential Balanced Fund - Started over 10 years ago, this is a balanced and hybrid fund, featuring more investment in debt than in equity. Over the last three years, this fund has generated good returns of around 10% and above on average.
1. SBI Bluechip Fund - There is no need to run when you hear the word “blue-chip”, as you may think this is an equity-oriented fund. However, this fund is viewed as the least risky among equity fund options as it invests in the best and most robust companies with a reputation for yielding returns.
2. HDFC Hybrid Equity Fund - Among mutual funds for senior citizens, this is a popular hybrid one, with an aggressive balancing of sovereign debt and equity.
3. Axis Short-Term Fund - Yielding returns of around more than 6% in the last three years, this is an excellent short-term debt fund that you can use to boost your income.
4. ICICI Prudential Dividend Yield Fund - This is one of the top-tier dividend-yield schemes among mutual funds, paying out regular dividends. The fund distributes wealth among large-caps, mid-caps and small-caps, balancing risk and reward.
If you open a Demat account while you are young, you can certainly take risks with equities and other high-risk investments. While you are earning a regular income, this is possible and even encouraged. You can even allocate your wealth to an upcoming IPO and diversify your portfolio well. The idea of investing wisely when you are younger is to have a substantial corpus when you need it at retirement.