Plan With Fixed-Income Funds
Outlook Money|July 2024
Fixed-income funds lend stability to your portfolio, have better cash flow visibility, and help preserve capital. They can be used in various stages of planning
- JOYDEEP SEN
Plan With Fixed-Income Funds

Financial planning for retirement can be broadly divided into two phases: the accumulation phase when you are earning, saving and investing, and the decumulation phase, when you are drawing from your investment kitty. There are also sub-parts to this: during the accumulation phase, there are multiple financial goals on which you spend money, and for which you need to plan. But between these two phases, there is also the consolidation phase. Here, say from age 55 to 60, you gradually move from riskier assets, which are more volatile, to the defensive assets to de-risk your portfolio in your golden years after retirement.

Let’s see how fixed-income funds can help you in the financial planning process in this stage.

What They Offer

Stability: Returns from fixed-income funds are relatively more stable than equity funds. The reason is that fixed-income instruments, such as bonds or bank deposits have a known rate of interest, which is taken into account in the daily net asset value (NAV) computation. This is, however, not the case with equity funds, where dividend is taken in the NAV only when it is paid. Price volatility in the equity market is also relatively higher, which makes the NAVs of equity funds fluctuate more. Hence, you should invest a part of your portfolio in fixed-income funds for stability.

Visibility: Fixed income assets give better clarity on the amount and timing of cash inflows. For instance, bonds have a defined maturity date and amount, while in case of mutual funds, target maturity funds (TMFs) have a defined maturity date and an estimate of the returns, which is somewhere around the initial portfolio yield-to-maturity (YTM). YTM data for funds are available in the monthly factsheet.

この蚘事は Outlook Money の July 2024 版に掲茉されおいたす。

7 日間の Magzter GOLD 無料トラむアルを開始しお、䜕千もの厳遞されたプレミアム ストヌリヌ、9,000 以䞊の雑誌や新聞にアクセスしおください。

この蚘事は Outlook Money の July 2024 版に掲茉されおいたす。

7 日間の Magzter GOLD 無料トラむアルを開始しお、䜕千もの厳遞されたプレミアム ストヌリヌ、9,000 以䞊の雑誌や新聞にアクセスしおください。

OUTLOOK MONEYのその他の蚘事すべお衚瀺
Gold ETFs And FoFs
Outlook Money

Gold ETFs And FoFs

While Indians love to invest in physical gold, even mutual funds offer the option, but in paper format.

time-read
2 分  |
November 2024
PLANNING TO BUY CHILD INSURANCE? THINK TWICE
Outlook Money

PLANNING TO BUY CHILD INSURANCE? THINK TWICE

Child insurance plans combine insurance and investment but often offer low returns due to high costs, making a combination of a term insurance cover and mutual fund a better option for securing your child’s higher education needs

time-read
7 分  |
November 2024
How Do You Define Happiness?
Outlook Money

How Do You Define Happiness?

Money does buy happiness, but after a while, the appeal fades. We talk about our relationship with money, but, maybe, it’s time to revisit our relationship with happiness

time-read
5 分  |
November 2024
Avoid Crypto As It Is Highly Volatile
Outlook Money

Avoid Crypto As It Is Highly Volatile

I am 22 years old and have recently started working. I want to invest a small portion of money in cryptocurrency. How should I go about it? Does it require a huge capital investment?

time-read
2 分  |
November 2024
Invest Right, Don't Speculate
Outlook Money

Invest Right, Don't Speculate

The lure of high returns and quick gains from equity tips, cryptocurencies, and equity F&O can be enticing. But remember, return of capital is more important than return on capital

time-read
4 分  |
November 2024
The Wedding & Budget: Is Minimalist Trend The Right Knot For You?
Outlook Money

The Wedding & Budget: Is Minimalist Trend The Right Knot For You?

Indian weddings are known for their pomp and grandeur, but minimalist weddings are also in vogue now. Dia Mirza was one such celebrity who went for a minimalist wedding. If you also want to keep things minimal on your big day, here’s how to do it

time-read
9 分  |
November 2024
Here's How To Buy An ETF?
Outlook Money

Here's How To Buy An ETF?

Mutual funds are the preferred choice for retail investors. However, they come at a cost and fund management risk, apart from other risks. A smarter alternative is to invest through ETFs.

time-read
1 min  |
November 2024
How Passive Funds Help Diversify
Outlook Money

How Passive Funds Help Diversify

Passive funds provide a simple way to invest in broad markets as well as in specific themes and sectors, making them ideal for an investor's satellite portfolio

time-read
2 分  |
November 2024
The Rise Of Passive Funds
Outlook Money

The Rise Of Passive Funds

The popularity of passive funds among retail investors has risen post Covid, and fund houses are out with many variations of ETFs and index funds. Does this category present a new opportunity for investors?

time-read
10 分  |
November 2024
Tax Reforms: What's In Store?
Outlook Money

Tax Reforms: What's In Store?

The government is working on reforming the existing Income-tax Act, 1961. The impending reforms have raised many questions in the minds of taxpayers. Will the old regime and deductions be done away with? Will it really simplify your life? What's the need for these reforms? We try to answer these and other questions regarding tax reforms

time-read
10+ 分  |
October 2024