Dhirendra Kumar tells whether you should invest in an index fund for your retirement
30-Apr-2018 •Research Desk
I am 34 years old. Which is a better option to invest for retirement--mutual fund or an index fund?
You have two options--an actively managed diversified equity fund or an index fund. And you should invest only via an SIP. You are only 34 years old and have 26 years to invest for your retirement. I feel the time for index funds hasn't come yet in India. Most of the actively managed funds are able to give superior returns in a period of five, 10, 15 or 20 years. When you look at the yearly performance, you might find many funds which haven't performed well. But as you increase the time frame the context changes. There are lots of reasons for this. Our indexes are weak and have been made for representation purpose only and not for performance. So, I would suggest you to choose one or two actively managed good diversified equity funds. Invest regularly and review your investment every two-three years. If you do this, you will be able to accumulate a good corpus in a tax-efficient way.