3 Important Reasons to Do Retirement Planning With Mutual Funds?

Reading Time: 2 minutes

Retirement Planning is a goal for many people. But just like usual, retirement as a goal always gets pushed for the future. You realize that it is essential but not urgent. It is highly easy to believe that you have years to go before you retire.

But one day, you wake up and realize you are much older and much closer to retirement than you thoughts you were.

Why Retirement Planning With Mutual Funds?

You have multiple options for retirement planning. So, here are some of the advantages of mutual funds over pension plans.

1. Mutual funds are more flexible investment products

Moreover like a pension plans, it does not have any restrictions on the regular premium payment or making complete or partial withdrawals in between. You can discontinue your investments or make partial investments with no penalties.

2. Mutual funds are tax efficient instruments

Long term capital gains booked under the equity mutual funds are completely tax-free. In the case of debt mutual funds, it is 10% before indexation and 20% after indexation.

Many times it is seen that after adjusting for indexation, the capital gain tax in the case of the debt funds also comes out to be around zero.

Thus systematic withdrawal plan proves to be a tax-efficient option as compared to a pension that is added to your income and thus is taxable.

3. Mutual funds are highly transparent and investor friendly

Mutual funds have a wide range of schemes. The information regarding the fund manager, investment objective, past returns, strategies, risks associated, etc is publicly available. However, pension products are not so transparent.

Happy Investing!

Also Read: Key questions that mutual fund investors should ask

Subscribe for Latest News and Resources