Mutual Funds for NRI: How Can An NRI Plan His Retirement with Mutual Funds?

Here’s how NRIs can get the most of their investment in mutual funds:

Retirement plans in the market come with a five-year lock-in period, trading liquidity for tax benefits. If you are closer to retirement, however, that may restrict your ability to redeem in the short term. Thankfully, flexible retirement mutual funds are now becoming available, which lets you switch between equity and debt, based on how close you are to retirement.

Given the diminishing returns on investment from actively managed mutual funds, it is a wise choice to opt for index funds , which are gaining popularity worldwide. These funds have the lowest administrative charges or expense ratios at well below 1%. This gives you the maximum returns at low risk.With retirement plans investing in equity are inherently riskier, you can opt for index funds that aim to match the underlying benchmark. They are ideal if you have to a low to moderate risk tolerance.

Living expenses will need to account for a sizeable portion of the overall retirement costs. If you are planning to relocate to India after retirement, you would also need to factor in where you will live. If you plan to live in a retirement community, your monthly expenses in terms of rent and maintenance will look a lot different.So, you can invest in Monthly Income Plans which give you steady returns every month. These funds invest in debt securities and protect your principal.

Retirement is a second chance at life. To maintain a comfortable daily lifestyle, you will need to maintain adequate cash flow. Liquid funds are an excellent option for short term financial needs of up to 91 days.Not only do they provide attractive returns, but they also carry the least amount of risk among mutual funds. The best part is that they can be liquidated within 24 hours.For both short and long-term retirement planners, debt and index funds offer a low risk, steady yield option. Liquid funds are a better bet for meeting day to day expenses. For emergency expenses, you can opt for hybrid growth funds which offer a higher potential for returns while balancing risk.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.