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Advantage Age

When you have age on your side, opt for equity investments to create wealth…

I am 26 and earn Rs 30,000 a month. I wish to know if I should invest in an insurance plan or mutual fund for my retirement savings.
- Dilip Kumar

You have age on your side as your retirement is easily another 30 years to go unless you desire to retire early. In the long run, equity is the asset class to beat inflation and deliver better returns. You can do so by regularly investing in mutual funds in a disciplined manner. This way the effect of regular investments and power of compounding will aid in building your retirement corpus.

Pension plans from insurers differ from mutual funds by guaranteeing a 4.5 per cent return as stipulated by Irda, the insurance regulator. However, on maturity of these plans you are allowed to withdraw one-third of the accumulation with the balance compulsorily going into buying anannuity. Whereas, when investing in an open-ended mutual fund, you can withdraw the entire investment at any time offering greater liquidity and choice to move investments between funds.

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