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Are Mutual Funds a Safe Investment Option for Retirees?

Retired people usually save their money in investments such as bank FDs, PPFs, real estate, gold, insurance, pension plans, and more. However, the truth about these options is most of these options can be difficult to convert into cash immediately. This may, in turn, cause undue stress, especially in medical or other emergencies. On the other hand, Mutual Funds can get the much-needed liquidity to retirees as they are easy to withdraw and offer post-tax returns.

The only thing that bothers retirees fearing investing in a mutual fund is the volatility or fluctuation of Mutual Funds. Instead, retirees should focus on some of their retirement corpus in Debt Mutual Funds and opt for a Systematic Withdraw Plan (SWP). This will help them earn a regular monthly income from such investments. Debt funds are a safer alternative option as they invest in bonds issued by banks, companies, and money market instruments. There are countless benefits of building a retirement portfolio via mutual funds. Here are some of them retirees should know about.

Offers Flexibility

Mutual funds are one of the most flexible financial instruments available. They enhance your income by increasing your investments, and you can withdraw the funds when necessary. If you keep a tab on the market movements, you can even consider investing in direct plans to save on commissions. You can also shift from a poor-performing fund to a better one.

Disciplined Savings

When creating a retirement corpus and portfolio, you need to invest in a long-term commitment. In other words, you may need to remain invested for a certain period. Systematic Investment Planning can help you start small, with very little money that would be debited from the savings account. It may also imbibe in you a disciplined savings habit. If you find it hard to invest funds for retirement and don’t know exactly where to start, then SIP may be the best option.

More Stability

When investors say they seek safety, they want stability in price or ensure minimized value fluctuation. These types of mutual funds for stability will usually mean providing balanced funds. It can enable investing in a combination of bonds, stocks, and cash, or other mutual funds, within one fund.

Sometimes balanced funds and target-date funds can diversify the holdings to ensure minimum losses. They also ensure long-term returns and are higher than other bond funds. If you diversify the assets, allow your money to low-risk assets such as bonds, and promise lower allocation to high-risk assets such as stocks, you can achieve lower relative volatility.

Wider Availability of Choices

There are a huge number of mutual fund options available. You can invest in a wide range of funds catering to your post-retirement needs. You can opt for equity funds to build your best retirement corpus if you start early. As you start with a goal, you can shift from equities to debt to protect your funds against erosion due to market volatility.

Mutual funds can help you add diversification to your portfolio. Your money is invested in varied companies in varied sectors. Diversification is one of the most crucial aspects of investing, and it helps balance the risk and reward equation.


Taking an active role in selecting the best retirement funds will help build and protect your nest egg. Pick the best 401(k) mutual funds that balance risk and expected returns while you minimize fees. It can ensure your money’s growth for retirement as it may also promise you good returns for the future. And whether you’re creating wealth for tomorrow or investing as a retiree, these mutual funds can offer capital appreciation in a significant way.
Before making any investments know your priorities. If you need your money before the stipulated three years, it’s not in your best interest to go for mutual fund investments. If your priority is safety, and you do not care much for near-zero interest, mutual funds may not probably be the ideal choice.

But if you want to keep up with the rising inflation rate with your investments, then investment in a mutual fund is probably a great idea. Try it to add diversity to your retirement portfolio to ensure the market fluctuations do not hamper your financial portfolio.

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