Retirement Planning with Mutual Funds: A Comprehensive Guide

Kavya Balaji   /   February 5, 2024

Are you in your 20s or 30s and already worried about your retirement or are you already into mutual fund investment?

I know it’s a long time but retirement planning has become mandatory in this fast-paced world. And trust me, it is not an easy task!
There are so many investment options available in current times that sometimes it can get a little confusing. Most of the people in India invest in mutual funds as they find it safe, come with multiple options, and have versatility.

Did You Know?

In the calendar year 2023, the cumulative SIP inflow reached ₹1,83,741 crores, with an additional ₹17,610 crores flowing in during December.

So are you ready to find out the perfect way to enter your golden years with the best mutual funds!

Why You Should Invest in Mutual Funds?

Mutual funds are the most versatile financial instruments that offer a great variety of products. You will notice that mutual funds have the ability to cater to investors of all types in different phases of their lives.

Mutual funds, due to their transparency and higher returns have proved to be the best retirement planning plan. Retirement planning is long-term and has proved to deliver the best returns in a longer period of time. Find the advantages of investing in mutual funds below:

Wide Range of Options

Mutual funds give you the freedom to invest in a broad variety of funds according to your retirement requirements. If you are starting early, then you might want to invest in mutual funds to establish your retirement capital. You can switch from stocks to debt whenever you feel that you are getting close to your goal. This will protect your gains from declining because of market fluctuations.


SEBI has introduced various measures to make the mutual fund investment process transparent and investor-friendly. The two best ways to ease the process are fund classification and risk-o-meter.


Mutual fund investment is very flexible as it lets you withdraw your money in monthly payouts or lump sum depending on your financial situation. Hence, there is no compulsion to choose annual payouts.


When it comes to mutual funds, you get the liberty to diversify your portfolio. Your fund is invested in different companies from different fields. The benefit of diversification is that it helps you balance your risks and gains.

How to Build the Right Retirement Portfolio?

Right Mix of Equity Funds:

  • Start aggressive: When you’re young and have a long investment horizon, you can take on more risk. Allocate a higher percentage (60-70%) to aggressive equity funds like small-cap or mid-cap funds for potential high returns.
  • Gradually moderate: As you get closer to retirement, gradually shift towards stable equity funds like large-cap or multi-cap funds for more stability and income generation. Aim for a 40-50% allocation in these funds.
  • Debt for stability: Don’t neglect debt funds completely. Invest 10-20% in fixed-income instruments like balanced hybrid funds or debt funds to provide stability and regular income in your post-retirement years.

Asset Rebalancing:

  • It’s crucial to rebalance your portfolio periodically (ideally annually) to maintain your desired asset allocation. Market movements can disrupt your initial mix, so selling some funds that have outperformed and buying those that have lagged helps restore balance and risk profile.

Risk Tolerance:

  • Be honest with yourself about your risk tolerance. Don’t chase high returns if you can’t stomach significant volatility. Opt for a mix that aligns with your comfort level, and don’t hesitate to shift towards more conservative funds as your age and goals change.

Topping Up During Corrections:

  • Market corrections present fantastic opportunities to boost your long-term returns. If you have spare capital, consider topping up your investments, especially in the aggressive equity funds, to buy when prices are low.

SIP for Consistent Growth:

  • Systematic Investment Plans (SIPs) are the best way to build a corpus for retirement. Investing a fixed amount regularly inculcates discipline and automates your investment process, averaging out market fluctuations and harnessing the power of compounding.

Here are some additional tips:

  • Do your research: Choose individual funds based on their past performance, fund manager expertise, and expense ratios.
  • Seek professional advice: Consulting a financial advisor can be beneficial, especially if you’re a beginner or have complex financial goals.
  • Stay invested for the long term: Don’t panic during market downturns. Remember, you’re investing for the long haul, and your portfolio will recover and grow over time.

Building a retirement portfolio is a marathon, not a sprint. Be patient, stay disciplined, and adjust your strategy as needed to ensure a comfortable and secure future.

If you are looking for a one-stop solution for all your mutual fund needs and make a retirement plan, switch to the Wealthzi app today!