When it comes to retirement planning, investment in mutual funds is a better option than buying annuities as MFs fare better in terms of liquidity, returns and tax efficiency.
Retirement planning is of utmost importance in a financial plan. In many developed economies, they do have some sort of arrangement where a fixed amount is deducted from an individual's income and is made available at the time of retirement as part of the social security scheme. However, in our country, though the government is taking steps in that direction with the introduction of NPS (National Pension System) and now also with the "PM Shram Yogi Mandhan" scheme, which makes pension available to the person from the unorganized sector. Despite all these efforts, most of us are still ignorant about planning our retirement. People believe that they have sufficient savings and investment to fund their retirement. They even argue that they are already doing retirement planning by investing in PPF (Public Provident Fund) and they are also entitled to EPF (Employee Provident Fund). But the reality is that there are very few people in our country who have a dedicated retirement plan in place, forget about people reviewing their plans periodically.
Some of the serious individuals go for annuity plans offered by insurance companies. However, when it comes to planning for retirement, how do these plans compare with mutual funds and, if there is a choice, should you opt for annuity plans or mutual funds? We will find out shortly.
We all know what mutual funds are, thanks to the "Mutual Fund Sahi Hai" campaign by AMFI (Association of Mutual Funds in India). But people know very little about annuity plans. They only know what the insurance agent tells them. So, let us understand what are annuity plans and the different annuity plans available in the market.
What are annuity plans?
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