Retirement Planning for Pension


I am planning to build corpus for getting pension after retirement. I looked at some pension plans given by hdfc/icici but most of the experts advised against putting money into these readymade plans offered by financial institutions as you could get more returns by simply investing in standard debt funds and managing your investment yourself.

Hence I decided to put some money in ppf on yearly basis and rest of the money in hybrid mf plans that invest in combination of debt and equity with less risk.

However I also realized that long term capital gains will be taxed if you invest in debt funds so are FD's.

Then What is the ideal thing to do so you take moderate risk and earn tax free returns to the extend possible.

Say if you want to invest 5 lacs per year for next 25 years to build retirement corpus. One option would be

1.5 lacs in ppf (tax free)
2 lacs in equity mutual funds with medium level risk (long term capital gains tax free)
Rest 1.5 in debt oriented hybrid mutual funds (will be taxed but aim to get 11% return over 25 years)

Does this make sense? Any advice from your experience?

Many thanks
Hi Nilesh

Your portfolio allocation looks fine to me though its more towards debt including PPF and hybrid scheme. If you are thinking for next 25 years you can very well allot more percentage of investment towards equity MF via SIPs as it will be tax free completely and you can generate really good returns from equity market over next 25 years.

Also before planning for income post retirement you should ensure you have sufficient term cover to protect your dependents in case of any unfortunate event