How do I determine the right schemes for my retirement portfolio?

Nov 11, 2019 | 4 weeks ago | Read Time: 3 minutes | By iKnowledge Team

Warren Buffet once said, “In the business world, the rearview mirror is always clearer than the windshield.” Golden words said by a genius and these words don’t just talk about the business in general but difficulty in financial planning for the future. Living in the present, trying to meet the current needs, retirement planning as a subject is left completely untouched. Though this phase is the most crucial period of our lives, we somehow just manage to neglect it entirely.

On the contrary, people who think to plan for retirement find it difficult as they are often clueless with regards to building a retirement portfolio. One thing that you must keep in mind while planning for retirement is that it’s not a 100m race but rather a marathon. Likewise, investors who are consistent and possess perseverance during transitional phases are the first ones to finish the line effortlessly. For retirement to be successful, you ought to have enough financial assistance which can help you sustain for as much as 20 years at least. Thus, your investment portfolio should be such that there’s no dearth of finance during that period.

Most of the retirees often struggle with expenses pertaining to their daily expenses and medical needs to name a few. There is no financial security at all. Though the government has provided various schemes including that of savings, insurance, pensions and FDs, the negligence of securing the future is what costs them their financial security in old age. When we talk about retirement portfolio, there are numerous options which can help strengthen your portfolio and Mutual Funds (MF) is one of them. With its systematic withdrawal plan, mutual fund can provide with a source of regular income which can come in handy at the time of dire needs.  

Why Mutual Funds?

Mutual Funds has many benefits, and this can be understood in two important phases:

  • Accumulation – The period where you earn and accumulate the amount for the post-retirement period. A diversified and versatile portfolio with prudent strategies is what’s going help you financially. Mutual funds are broadly classified under five categories amongst which equity, debt and hybrid are the major ones.  
  • Distribution – The phase which begins post retirement and calls for optimum distribution of invested money. Financial planning plays an integral role at this stage as the funds need to be allocated appropriately.

 How do I know if I have invested in a right scheme?

There are numerous ways to find whether your investment schemes are a seed or leech. However, the best way to do so is by keeping tabs on the mutual funds’ past performance. It is single-handedly, the most crucial parameter to measure growth. Consistency plays a key role with regards to the period which can be anywhere between 3, 5 to 10 years.  

Alongside consistent performance, fund management and asset management efficiency are a critical factor and must be kept in mind. Based upon your risk appetite, you ought to invest certain amount in equity mutual funds keeping in mind the diversification across balanced and large cap funds. Sectoral and thematic funds (mid and small caps) should be avoided if you want to generate stable returns rather than high returns.

From the points mentioned above, we can draw following points which can help understand whether a scheme is right or not.

  1. Past Performance
  2. Consistency in Performance
  3. Fund Management
  4. Asset Management
  5. Returns expectations

Whether you have invested in the right scheme or not, your knowledge about the points above will help you yield positive results. However, if you do your research and act accordingly, you will have a much more stable retirement as compared to the people in your age group. The most important thing when investing in a scheme is to have patience and stay in it for a longer time. To know about Aegon Life’s life insurance products like term insurance and other products, visit our home page.


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