Why NOT to and why to invest in Tata Retirement Savings Fund
Planning for retirement is an important goal every individual has. Tata Mutual Fund's Retirement Savings Fund plans to offer you a financial planning solution to meet this goal. The fund primarily targets the young and middle-aged wishing to plan for their retirement.
The product: The fund offers three options – progressive plan, moderate plan and conservative plan – with different proportions of equity and debt. The progressive plan, for investors aged below 45, will have 85% to 100% allocation to equity; the balance, if any, will be invested in debt.
Once the investor turns 45, the corpus will be switched to the moderate plan, where the equity allocation is lower between 65% and 85%. Finally, when the investor turns 60, the investments will be shifted to the conservative plan, which will have debt allocation between 70% and 100%, with a small part of 0% to 30% going to equity.
The equity portion of the money will be invested in a mix of large-cap and mid-cap stocks. Thus, the fund offers an 'auto-switch' feature, which takes away the hassles of adjusting the equity-debt proportion with increasing age. When an investor turns 60, he/she will need a regular cash flow. To meet this need, the fund has an auto-SWP (systematic withdrawal plan) option. There are two plans under the auto-SWP option:
MONTHLY: Here, 1% of market value of investment as on date of completion of 60 years of age will be paid
QUARTERLY: Here, 3% of the market value of investment as on date of completion of 60 years of age will be paid.
The amount switched out under this facility will be treated as redemption from the unit holder's corpus and will be subject to the folio having a minimum balance. The new fund offer (NFO) is on till October 21.
Why invest: You get a readymade asset allocation plan, without having to bother about investing in multiple products
Why not to invest: The product lacks customisation. One individual's needs will vary from another's. In case you wish to withdraw your funds early, the exit load is high.
Source: Economic Times
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