Table of Contents
Introduction
In today’s ever-evolving financial terrain, the agenda of constructing a resilient retirement nest has come forth as an individuals financial decisions so it is necessary to discuss the benefits of Retirement Funds. As traditional forms like the Public Provident Fund (PPF), Pension funds, and the National Pension System are facing uncertainty, leading more people to explore mutual funds. Mutual fund retirement schemes are seen as promising options, offering hope for a financially secure post-retirement life.
With financial certainties looming, there’s a rush among individuals to strengthen their retirement plans. Traditional retirement options like PPF, Pension Funds, and NPS are facing scrutiny for their ability to handle market volatility. This has led savvy investors to look for more dynamic and adaptable alternatives, like mutual funds.
Retirement Schemes
Enter mutual fund retirement schemes, heralded as the vanguard of modern-day retirement planning. Armed with a multifaceted arsenal of investment strategies and management philosophies, these schemes epitomize the essence of versatility and resilience in an era defined by flux and uncertainty.
Starting a retirement plan in your 20s is one of the smartest financial decisions you can make. The power of compounding allows your investments to grow significantly over time. Here are some retirement schemes to consider in 2024 if you’re in your 20s:
Employee Provident Fund (EPF)
EPF is the popular name for Employees’ Provident Fund. It is a government-established savings scheme for employees of the organized sector. The EPF interest rate is declared every year by the EPFO (Employees Provident Fund Organization) which is a statutory body under the Employees’ Provident Fund Act, 1956.
Employers and employees contribute 12% of the employee’s basic salary each month. The contributions earn a guaranteed interest rate in return.
Public Provident Fund (PPF)
A long-term savings scheme with tax benefits, suitable for all individuals. This is a 15-year investment plan, which can be started with the minimum sum of Rs.500/- only and an annual of 1.5 lakhs per annum.
One can open a PPF account at a bank or post office and contribute regularly to build a tax-free corpus.
Atal Pension Yojana (APY)
Atal Pension Yojana, formerly known as Swavalamban Yojana is a government-backed pension scheme in India, primarily targeted at the unorganized sector. It was mentioned in the year 2015 Budget speech by the Finance Minister Arun Jaitley. It was launched by Prime Minister Narendra Modi on 9 May 2015.
Provides a guaranteed pension ranging from ₹1,000 to ₹5,000 per month, based on contributions made during the working years. Contributions are auto-debited from the subscriber’s bank account.
Mutual Funds
Mutual Funds are investment vehicles that pool money from multiple investors to invest in stocks, bonds, and other securities. They offer diversification, professional management, and potential for higher returns. Tax-saving mutual funds (ELSS) provide tax benefits under Section 80C.
One must invest in a mix of equity and debt mutual funds based on your risk tolerance. Consider Systematic Investment Plans (SIPs) for disciplined investing.
Fixed Deposits (FDs)
Fixed deposits are traditional savings option with fixed returns on the invested amount. FD’s carry low risk and guaranteed return ratio.
It is advised that one shouldn’t invest all their earnings in FDs, the fixed-income part of your portfolio, ensuring you don’t lock away all your funds in long-term FDs to maintain liquidity.
