Hybrid funds & Retirement Planning

The main aim of hybrid funds is wealth appreciation in the long-term and income generation in the short-term through a balanced investment portfolio. The investor’s money is allocated in debt and equity-based investment investments in different proportions. If more than 65% of assets are invested in equities and rest in debt instruments it’s an equity-based fund while if the majority share of assets is in debt it’s adebt-based fund. Depending on the need and risk tolerance level, an investor allocates their money in various funds to plan their retirement.

The Reason why Hybrid Funds are good for retirement planning

Considered to be a safer bet than the pure equity funds, hybrid funds are one of the favourites of the conservative investors who want to plan their retirement.  Hybrid funds offer higher returns than the debt funds as it is a blend of debt and equity funds and an ideal way to tide over the equity wave. The debt fund cushions the investor against severe market volatility and generates steady returns at the same time. The opportunity to allocate and rebalance the proportion of funds enables the investors to make the most of market fluctuations. This is why hybrid funds are good for retirement planning. Depending on their need, financial requirement and risk tolerance capacity an investor can invest in balanced funds, monthly income plans or arbitrage funds and plan their retirement accordingly.

How to make the most of hybrid funds for retirement planning?

Hybrid funds just like all the other funds have their share of merits and concerns, an investor who wishes to plan their retirement with the help of hybrid funds should be aware of their functioning in different situations.

These crucial factors must be taken into consideration during the process of retirement planning:

  • Risk:Hybrid funds are not 100% risk-free. Rebalance and reassess your investment portfolio on a regular balance to even out market risks.
  • Return: Though hybrid funds do not offer guaranteed returns, the returns earned from them is comparatively more than debt funds. Build your portfolio to incorporate funds that don’t get much affected during market movements.
  • Cost: Improve your chances of earning higher returns by opting for hybrid funds that have a lower expense ratio.
  • Investment term:Hybrid funds are deemed comparatively ideal for a mid-term investment horizon. To earn risk-free returns from your hybrid funds make sure to invest in funds that do well under different market conditions.
  •  Tax on Gains: The debt part of the hybrid fund is taxed in a way similar to debt funds. While the long-term gains on equity are taxed at 10% on gains over Rs.1 lakh, the gain on short-term is taxed at 15%.
  • Financial Goals: Though some investors use hybrid funds to meet their intermediate goals, you can plan your retirement through them by investing in funds that offer dividends to supplement your earnings after retirement.

Find out more about Hybrid funds and how to utilise it for solid retirement planning by consulting our professional fund managers and financial planners and secure your life after retirement well.


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Mutual Fund investments are subject to market risks, read all scheme related documents carefully. Past performance is not an indicator of future returns. Wealth Redefine is a AMFI registered Mutual Fund distributor – ARN - 167127

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