Tuesday, October 18, 2011

TATA RETIREMENT SAVINGS FUND


Modelled to cater to your retirement needs.


With rising inflation especially Medical Inflation, and the fact that there is no Social Security by the Govt of India, it is necessary to be adequately prepared when it comes to Retirement Planning.

With this in mind, Tata Mutual Fund has come out with Tata Retirement Savings Fund.  The Fund  aims to provide a financial-planning tool for long-term financial security based on retirement-planning goals.


INVESTMENT STRATEGY :

The strategy of the fund will be predominantely Large Caps with a mix of mid-cap firm, however, the focus will mainly be on big caps.

This retirement-specific mutual fund scheme has an "Auto-Switch" facility. The fund is designed to meet the investment needs of investors in different age brackets. It offers three options to investors—'Progressive Plan', 'Moderate Plan' and 'Conservative Plan'—with varied percentage of equity and debt assets.

The "Auto-Switch" feature is supposed to do away with the hassles of adjusting the equity-debt proportion of the portfolio with increasing age. The fund is assuming that the investor depends on his "advisor" for switching assets between equity and debt with increasing age. The facility of "auto-switch" does the necessary asset allocation automatically—as the investor crosses into a different age bracket.

The progressive plan is for investors below 45 years of age, with 85-100 per cent of funds allocation in the equity assets. Once the investor turns 45 he/she would be automatically switched to the moderate plan, where the equity allocation will come down to 65-85 per cent.



Thereafter, at the age of 60, investors will be shifted to the conservative plan, where fund allocations in debt assets will reach as high as 100 per cent. In short, a single scheme will turn out to be a debt scheme after being an equity scheme



Exit load: It carries a 5 per cent exit load if redeemed within one year, 4 per cent if redeemed between 1 and 2 years, 3 per cent if redeemed between 2 and 3 years, 2 per cent if redeemed between 3 and 4 years, 1 percent if redeemed after 5 years from the date of allotment.

The Age Limits are not compulsory and can be flexibly used by an investor as he pleases.


COMMENTS & REVIEWS :
It is imperative that Planning for a comfortable and Financially sound Retirement is a Must.
Every investor should be careful and savvy to plan for Retirement. He should take the help of his Financial Advisor in preparing a Solid Retirement Plan.

For those who are short of time or who do not have a Financial Advisor to look after their investments, then this Fund is a "MUST HAVE" and is a good alternative to passive investors.

Similar products in the market like the Templeton India Pension Plan & UTI Retirement Benefit Fund invest upto 40% in equities and though relatively safe may not be able to generate Alpha returns which the TATA RETIREMENT SAVINGS FUND is capable of.

And it is a well know fact that Equities yield higher returns compared with any other investment class.




NOTE :

THE FUND HAS A HUGE EXIT LOAD OF 5% PROGRESSIVELY REDUCING....TO DISCOURAGE EARLY  WITHDRAWAL FROM THE FUND.

THE FUND OFFERS ONLY "GROWTH" OPTIONS SINCE THE FUND AIM IS TO BUILD A HUGE CORPUS FOR YOUR RETIREMENT.



VERDICT :

Definitely better option compared to other options like the PPF, Insurance, etc which are available in the market right now.
I think if you do not have a Financial Advisor, you can go for the Fund.
Otherwise, your Financial Advisor should be able to create a Much better and more Diversified Retirement Portfolio for you.


Go for the Auto Switch Option, but keep a hawk eye on the performance and switch yourself before the "Auto Switch" if your Financial Advisor says so.

Final Verdict, the combo of Diversified Funds + Term Insurance + Real Estate + Gold  is the Best formula for your Retirement Planning

HAPPY RETIREMENT,

SRIKANTH MATRUBAI



Also visit
http://equityadvise.blogspot.com

1 comment:

  1. Hi Srikanth,
    Both Templeton India Pension Plan & UTI Retirement Benefit Fund provides tax saving benefits under 80 C, what about this fund?
    What would be the fate of such funds after DTC comes into affect?

    -Saket

    ReplyDelete

Translate