Which Type Of Mutual Fund Schemes Should You Explore Post-Retirement?

Retirees need to carefully consider mutual fund schemes in sync with their financial needs, as they can't afford to commit a mistake

Amit Sethi
November 6, 2023
Mutual Fund Schemes

Mutual Fund Schemes

Post-retirement, people usually focus on two important aspects before investing their money. One is the investment to generate a regular income to meet their short-term expenses. Two, investing to preserve their capital so that they can beat inflation and their corpus doesn’t fall short of fulfilling their financial needs for the rest of their lives. Mutual funds offer attractive investment options for retirees to help them achieve their financial goals. Here are some attractive mutual fund schemes that you should explore post-retirement. However, investors should keep in mind to avoid allocating their money to a single mutual fund scheme, and they must diversify their investment into different options in sync with their financial goal. 


Equity Mutual Funds Scheme 

Equity schemes can help retirees get a high return on investment and boost their portfolio return so that it can easily beat inflation in the long term. There are several options available under the equity assets class in the mutual funds. Post-retirement, you should focus on allocating a small portion of your corpus to equity mutual fund schemes for long-term purposes. Prefer a large-cap fund or index fund as they are less volatile and carry a lower risk compared to mid and small-cap funds. You may also invest a fixed sum out of your pension income to an equity systematic investment plan (SIP) to lower the risk and to get the benefit of Rupee cost averaging in the long term. For low-risk options, you may also explore an arbitrage fund. 

Debt Fund For Regular Income And Capital Protection 

For low-risk investment purposes such as protecting the capital for the rest of your lives and earning a decent return regularly, you may invest in debt mutual fund schemes. You may choose different types of debt mutual fund schemes for various purposes. For example, to achieve short-term financial goals, you may invest in a liquid fund or ultra-short-term debt fund that holds securities with very short-term maturities.  

Hybrid And Balanced Advantage Fund For A Decent Return Amid A Volatile Market 

Hybrid fund invests both in equities and debt asset class. You get two choices in a hybrid fund: it can be an aggressive hybrid fund that invests up to 65 per cent to 80 per cent in equities, or it can be a conservative hybrid fund that allocates up to 10 per cent to 25 per cent of their corpus in the equities. You may choose between aggressive or conservative dynamic funds depending on your return requirement and risk appetite. A hybrid fund can help you earn a very good return on investment despite a volatile market without putting your capital at high risk. Amid high volatility in the stock market, investors can choose a balanced advantage fund and a hybrid fund as they dynamically adjust allocation from debt to equity or vice-versa based on the volatility in a particular asset class. 


To generate regular income, the investor can set up systematic withdrawals from their various mutual fund schemes so that the withdrawal rate is lower than the growth offered by the selected fund. 

Though mutual funds offer several attractive investment options for retirees, it’s important that they also include other investment instruments, such as small savings schemes, fixed deposits (FDs), etc., to provide better diversification and more stability to their investment portfolio.                                                    

The author is an independent financial journalist

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