The Role of Mutual Funds in Retirement Planning

This is our setup derived from successful investors on how to invest by age!

You want to make sure that your asset allocation meshes with your stage in life, and what you hope to accomplish. Make sure you don't have inappropriate overlap, that you are properly diversified, and that your asset allocation makes sense for your risk profile. 

Yes, you should invest or allocate your assets according to your age for an ideal portfolio. It is because the younger you are the risk you take can be more, and you can see how magic of compounding can work in a long run. If you are mid age guy, you will be having responsibilities and you need funds in case of emergency. Here I come with the solution which is ideally applicable in respective age groups.

I have divided people in to 4 categories on their age bases, and the formula that’s been used over decades I am using same with some little changes  

FORMULA

% of amount you invest in to Share Market =100- your age 😃

Twenties (20yrs-29yrs)

You people are young and will be having no big responsibilities (I hope so). You can risk as much as possible but ideal it is 70%.

Stocks/Mutual Funds: 70%
Bonds/FD/RD: 20%
Cash in hand: 10%

Thirties (30yrs-39yrs)

Your 30s brings on a whole new set of responsibilities including career and family. Take a look at your emergency fund. Is it big enough to cover your current lifestyle? Chances are that you have more expenses and obligations now than you did in your 20s. The emergency fund you had for that decade just isn’t going to cut it for your 30s.

Stocks/Mutual Funds: 60%
Bonds/FD/RD: 30%
Cash in hand: 10%

Forties (40yrs-49yrs)

No that you're in your 40s, it's a good time to think about your priorities, and make sure that they are still applicable. The things you set in motion during your 20s and 30s may not still be important to you now. Re-evaluate your priorities and figure out what's important to you. If you find that you are still working toward things that aren't important to you now, it's a good time to change course. It's not too late.

Stocks/Mutual Funds: 50%
Bonds/FD/RD: 40%
Cash in hand: 10%

Fifty plus (50+ )

While you do want to use your 50s as a time to really kick your retirement planning into high gear, don't forget to enjoy your money now. You've worked hard to get to this point, and if you can afford some of the pleasures of life, go ahead and do so.

Stocks/Mutual Funds: 40%
Bonds/FD/RD: 40%
Cash in hand: 20%

This is all about allocation in equity market.

How to plan Life cover/ real-estate will see in upcoming post. STAY TUNED 😇

Happy investing 😄