Retirement Fund or the pension funds are the investment schemes that allows an individual to invest portion of their income for their retirement. These funds offer regular finance to the retiree of their retirement, respectively. These retirement funds either may be self-invested or also can be invested on behalf of the retire, as these funds are independent of the asset returns and market fluctuations, they offer fixed benefits to the investors. Usually pension funds invest in low-risk investments so they could provide regular payment, approximately 11% of interest rates could be offered depending upon the investment policy. Let us know what the purpose of the retirement or pension fund is, the motive of these funds is to provide regular source of income who does not have any income source during at their retirement age, so they could enjoy and live peacefully their golden days. Pension Funds are the type of deferred pay that offers financial security for the individuals to fulfill their necessaries. Retirement funds usually offers the returns either monthly pay or as the lump sum portion.

What are the modes of investing in Retirement Funds?

Investor can plan to save for their retirement either by two modes the Lump Sum or One-time investment option or by Systematic Investment Plan or SIP.

Lump Sum Investment Option:

This is suitable for those individuals who are healthy towards the cash reserve, under this mode investors park their money just at one go. These onetime mode investments have higher risks associated. so, it is suitable for the individual with high-risk appetite and who have sound amount reserve that to be invested. Comparatively these modes offer higher returns than the SIP.

Systematic Investment Plan:

Under SIP mode, an investor can invest certain amount monthly until he/she reaches their goal of investments. These modes create the pool of fund investments for the investors, which is a good option for the first-time investors, though these modes don’t offer many returns, but they are of low risks and offers benefits efficiently.

What are the factors to be considered before investing in Pension Funds?

  • Check the present Age of the Person.
  • Retirement Age (Expected)
  • Expectancy of life
  • Rates of the returns
  • Monthly Expenditure
  • Inflation rates, etc.

What are the Advantages of Retirement Funds?

  • Flexible Savings
  • Creates Long term investments plans.
  • Tax benefits
  • Covers Insurance
  • inflation Protection
  • Low risk investment plans
  • Better returns

Bottom Line:

Retirement period is one of the tough horizons of every individual, where everyone looks for a happy and healthy time to have in, which can be done with the financial support. Government employees gets their regular retirement incomes. But for the private or for unorganized sector employees it is recommended to plan for their retirement so they could get financial help at their golden age.