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Should you continue investing in mutual funds post retirement?

Should you continue investing in mutual funds post retirement?
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Come retirement and you’ll finally get a chance to clear out your calendar, slow down and take it easy.

Quick question – should you slow down and take it easy with your investments as well?

Since you have accumulated a corpus, you might be worried that investing it wholly or partially in seemingly risky investments such as equities or even mutual funds might end up being detrimental to you.

Why should you invest in mutual funds post retirement?

With returns on Government and bank related savings schemes decreasing year on year, it does not make sense to invest in such schemes, because you stand lesser chance to beat the rate of inflation.

Furthermore, a number of these schemes have lock-in periods. If you decide to withdraw your investment during these lock-in periods, you will stand to pay a penalty or receive a lower rate of return on your investments, or both.

Mutual funds, on the other hand, are liquid and generally do not have a lock-in period. They are easy to redeem and are tax effective, especially in the case of equity funds. If you are a seasoned investor who has knowledge about financial markets and mutual fund investments, post retirement can be a good time for you to invest in mutual funds, as you can track the market and your investments at your own pace and time. If you are worried about the volatility of the equity market, you can always opt to invest in a debt fund or a liquid fund, provided you have the capacity to take on a small amount of risk.

It is important to note that debt funds are not entirely risk-free and do not guarantee returns. If you do not have the capacity to take on even a small amount of risk, then you should avoid investing in mutual funds.

If you are not a seasoned investor, it can be beneficial for you to consult a financial advisor to help determine your risk taking capacity, as well as advise you on which funds are suitable for you. It is also important that you track your investments and evaluate your portfolio performance as well as requirements periodically.

Disclaimer: Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

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