Too old to plan for your secure future? No.

Too old to think about mutual fund investments? Certainly not.

Age is no bar when it comes to securing your retirement. And you’re never too old for mutual funds. Even if you’re above the age of 40, you’ll still find a fund to help you achieve your life’s goals.

If you have a high-risk appetite, then you can consider investing in equity or stocks via mutual funds. If you seek income generation rather than high returns, then you may consider debt funds as your go-to options. You can also invest in both equity and debt.

So how do you achieve the right balance between the various mutual fund schemes available in the market today?

And, how do you decide how much equity and debt to include in your portfolio?

Here’s where your age really matters.

We shall explain this to you with a simple thumb rule.

Let’s say you’re 40 years old. Subtract 40 from 100. The remainder is 60.

This means that your portfolio should allocate 40% to debt instruments and 60% to equities or stocks. The logic is that as you grow older your ability to take on risks decreases.

Therefore, you need to look at more debt instruments such as bonds when you grow older.

What type of mutual fund you should invest in depends on your needs: are you looking to increase your investment or are you looking for a fixed income?There are several different types of equity mutual funds that will suit your financial goals. And, if you’re looking for low-risk mutual funds, then ELSS funds are what you should look at.

What should I know before putting my money in a mutual fund scheme?

• Ask yourself these key questions:
• How much money do you need at retirement?
• How much risk can you take on?
• How much do you need to maintain your current lifestyle?
• When do you plan to retire?

  Understand yourself, your investment horizon and your ability to take risks because there are mutual funds available for every kind of investor.

• During your earning years, equity funds are ideal because they tend to do well over the long term. When you’re five years away from retirement move your funds to debt instruments. Remember, the point is to lower your risk exposure as you grow older.

Here are some rules to follow when you’re trying to build a post-retirement corpus

• Cut down equity exposure in your portfolio gradually as you approach your retirement age
• Invest in mutual funds that will help you beat inflation
• Avoid funds with long lock-in periods. What this means is that during this lock-in period you can’t withdraw any funds before the maturity date. Investments such as Equity Linked Savings Schemes or ELSS funds offer tax savings plus lower lock-in periods of three years compared to traditional tax-saving instruments like the Public Provident Fund. In a way, ELSS funds let you cut your cake and eat it too.
• Keep your risk level low and go for hybrid funds that invest in both debt and equity.
• Consult your financial advisor and also read the offer documents to know in detail about the product.

How do I invest in a mutual fund?

More and more investors are choosing to invest in mutual funds using systematic investment plans (SIPs).

SIPs allow you to make fixed, regular payments every month that lends some discipline to your investment. These automated payments prevent you from making investments in an arbitrary fashion. Other investors choose to invest a lump sum amount into their portfolio.

The market today offers several different kinds of investment options regardless of your age. The earlier you begin financial planning the more secure your future usually is. But know that it’s never too late to start investing in mutual funds.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.