Building a Retirement Fund for a relaxed future?

At one point or the other, we all have to start building a fund for our retirement lest we are left wanting in the golden years of our lives. In a previous article (link to investment and inflation), we explained the effect of inflation on your investments. We all understand the value of our savings today would be almost 50% by the time we retire and the cost of living would almost be double. This clearly indicates the importance of prudently calculating how much we’d need in the future and start building that corpus as soon as possible.

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Saving for retirement is the last priority after all other responsibilities such as the education of children, their wedding and other such occasions. This means that one could start saving small quite early in life to reap benefit from the magic of compounding over the years.

While various pension schemes such as ULIPs, NPS, PPF, EPF and Mutual Funds are available for investors, it is the equity fund investments that have shown the greatest returns over a longer period of time historically. Though, investing in equity has risk associated with it, which can be mitigated by diversifying the portfolio and including debt funds in it as well.

Before you start investing, ask yourself the following questions:

  • How many years have you left for retirement?
  • How many years due to expect to live in retirement (life expectancy)?
  • What is the monthly amount you would require to meet your current lifestyle?
  • How much savings do you have?
  • What is your risk appetite?

Once you have answered these questions, use an online calculator to know how much you need to invest to build the corpus that you need when you retire. It is a good idea to get in touch with an experienced wealth advisor such as Dr. Celso to get genuine advice for getting the max out of your investments.

Once you have a financial advisor to guide you, you can safely invest in mutual funds keeping in mind your risk appetite. When you are young, it is good to have more of equity funds in your portfolio as your risk capacity is high. As you age, you must have a systematic transfer plan to move your investments to debt funds and once you retire, the risk profile should be zero.

Also, do not underestimate the power of small disciplined savings through SIPs for your retirement. Small investments through SIPs over a period of 15-20 years will add a huge amount to your retirement fund.

A good retirement plan should have the following characteristics:

  • Investment in equity not based on your age, but on your risk appetite and financial goals.
  • Tax free returns and tax benefits during the course of payment.
  • Option to invest in equity even after retirement.
  • Systematic transfer to less risky portfolio at later age.

There are two keys to smartly save for the golden years without feeling a pinch today – starting early and picking the right fund!

Remember, saving now is the only way to achieve a worry-free life in your retirement. Act now to build a safe future for yourself and your family.



Would you ever board a train without knowing the destination? No, never! Then why do most investors end up investing with no clear goal? Investing without purpose is waste because you will be tempted to use your savings at the word ‘go’!

Any successful investor would tell you that the type and class of investment should be aligned to your financial or life goals.

Fiancnial Goals


There are four main kinds of asset classes in which you can invest.

  • Debt Funds such as Provident Fund, Fixed Deposits, NSC and Post Office Schemes. The returns on this class may almost match inflation but investing purely in debt funds will not be adequate to match your long-term financial goals. Such investments are good for short-term goals such as an annual vacation.
  • Real Estate – Considered to be the safest investment by many, it doesn’t hold true any more. Many factors contribute to the price of your property and it will not always escalate. While you may buy a house and save on the rental, don’t put all your money in property. You won’t be left with any liquid cash for either short or long term goals.
  • Bullion/Gold – This asset class can give you returns in step with inflation and is a good way to diversify your portfolio. However, it cannot be your only mode of investment.
  • Equity – Investing in equity is best suited for long term goals such as your child’s education, wedding or your retirement fund. One must understand that investing in equity may be disappointing over a short term and actual returns can only be seen over a longer period of over 5 years.

Here are some tips to help you align your investments to your life goals:

  1. Ask yourself a simple question, “Why should I invest?” Unless you are clear about what you are saving for, you are just wasting your earning.
  2. Divide your goals into short term (1-2 years), mid-term (3-5 years) and long term (over 5 years).
  3. Don’t keep all your eggs in one basket – diversify your investments. Debt funds for short term, SIPs and debt funds for mid term, real estate and bullion for security and equity for long term.
  4. Don’t just think of investing in fixed deposits. There are other risk-free schemes that give better returns.
  5. Don’t invest to save tax. Tax savings are an additional benefit but not your goal. Take a look at debt mutual funds for more efficient tax savings.
  6. Invest as per your risk taking appetite. If you are averse to taking high risk, get in touch with a financial planner to build a portfolio suitable to your requirement and risk taking appetite.

Remember, a journey without a destination will not take you anywhere. Decide on your goals first, and save to fulfill them on time. Dr Celso’s Navemarg is happy to guide you along your way.

Should your SIP be spread over a month?

SIP or Systematic Investment Plan is considered a safer and convenient option to build your wealth over a long period of time. However, many investors are not able to take full advantage of SIPs as they are not fully aware of how SIPs function. Mostly, if the market faces a slump, investors would get fearful and stop investing money, losing out on the chance to buy more stock at lower prices.

It is important to understand the product right to reap maximum benefits out of it. Today, we are going to debunk one such myth related to SIPs.

Many of us believe that breaking up our monthly investment amount into small pieces will give us better returns than making one monthly payment ie paying INR 10,000 in small instalments of INR 2,000 fives time a month would give better returns than investing INR 10,000 in one go.

Not getting into the numbers here, market research has shown that the difference in returns in both the above scenarios is almost nil.


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Many investors may argue that smaller instalments spread over the month can reduce the risk profile, however, this strategy is not backed by any research. On the contrary, it may interfere with your monthly budget! We advise that you stick to a monthly date for your SIP investment so that you are disciplined in your approach and never miss a payment on your road to riches.

Happy investing.

4 MF tips you must not follow

#1 Always buy funds with lower NAV

NAV is irrelevant while choosing the fund you buy. If you have decided to buy funds worth INR10,000, the amount stays constant irrespective of the fund you invest in. Further, if you have to choose between funds with identical portfolios, whether to buy lesser units of the one with higher price or the other way round, your percentage growth is going to be the same.

Basically what this means is that the return on your mutual fund is not dependant on the number of units you buy or the NAV, but on the stocks chosen by you.

#2 Choose ETFs over regular funds

While mutual funds and exchange-traded funds (ETFs) both have their pros and cons, a prudent investor would mostly choose regular funds over ETFs.

  • Mutual funds offer you a variety of funds that you can choose depending on your risk appetite and investment strategy. Such a variety is not available in ETFs.
  • Having a lower expense ratio than mutual funds, there are no fund managers providing shareholders services and support for ETFs.
  • The feature of SIP that is revered by many investors for organized and systematic investment is not available in ETFs.

#3 Sell your funds as soon as the dividend is declared to make a profit

Most investors get excited and quickly sell their funds once the dividend is declared thinking they have made some quick money. But do you know that the dividend is paid out from your own money that you invested in the stock! Mutual funds multiply your investment is you are patient and let the principle of compounding work its magic over the years. Don’t get tempted to sell out too soon.

#4 Expense ratio

Expense ratio refers to the cost of owning a fund. It refers to the part of the fund that goes towards running the fund including the administrative costs, advisory fees and operating expenses. One must understand that expense ratio is not the only factor that leads to the performance or underperformance of a fund. In fact, as discussed in point #2, passively managed funds such as ETFs have lower expense ratio than mutual funds.

The costs are an integral part of mutual funds but the returns you see are post expense returns. A high return basically means that the returns are high post the expenses, which means your fund is performing well.

Don’t choose a fund simply because of its low expense ratio. Check the performance over time before you make a decision.

4 tips

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Dr. Celso’s NaveMarg helps you grow your wealth by helping you maintain a healthy portfolio. Contact us to receive more guidance on mutual funds and related products.