Are you planned enough for your retired life?
How do you picture your retirement will be? Most of us today in our working years envisage retirement a little differently from how our parents did. Retirement is no longer about living a solitary life or just as grandparents. It is about living a better conscious life and pursuing all the passions that busy working years could not allow. It is also about being free from the ‘earning to make a living’ pressures, what we call as the financial freedom.
Why plan now?
To be financially free in our second innings, we need preparation now. Due to ever growing inflation & diminishing value of money over time, mere savings for retirement may not be enough. With growing life expectancy and medical costs multiplying, retirement life could be a squeeze, unless we invest better.
A Retirement Plan comes in handy to live it up in the Golden Years. It creates the discipline of regular investing coupled with benefits of compounding.
Aditya Birla Sun Life Retirement Fund, an open-ended retirement solution oriented scheme having a lock-in of 5 years or till retirement age (whichever is earlier) is a scheme that gives a lot of flexibility and customization benefits to investors. The plan uniquely offers 30s, 40s, 50s & 50s Plus Debt Plan for varied age groups, giving higher equity exposure to younger risk taking investors and increasing Debt investments for higher age plans where safety of corpus is required. For example, the 30s plan has up to 100% equity exposure while the 50 Plus Debt Plan has up to 100% Debt instruments.
Benefits of Retirement Planning
In addition to peace of mind, it lets us:
Maintain Lifestyle
Retirement doesn’t mean that we have to give up good eating or traveling or enjoying club memberships. In fact, it is time to do all that even more. So padding up retirement corpus helps maintain the same or better lifestyle.
Fulfil Dreams
The dream of cruise vacation or setting up our own library requires free time, which is abundant in retirement years. So all the dreams should be fulfilled. After all, one life is all we have.
Protect Health
Doctor consultation bills, medicines or even surgery can be a constant with age and Healthcare costs are going through the roof nowadays. A retirement fund will ensure that health care will never go out of reach, even if expensive.
Leave a Legacy Behind
Who doesn’t wish to retire rich and have something sizeable to leave behind for children and grandchildren? A well thought out retirement plan not only keeps us in good stead while alive, it also takes care of generation next.
For whom is this Plan?
in 30s
Aditya Birla Sun Life Retirement Fund –‘The 30s Plan’
This plan is designed to aim for wealth creation and generating higher capital growth over long period of time. It’s ideal for investors who have just started their careers and are very far from their retirement.
While in “30s” we have many benefits on your side:
Time: Up to 3 decades to retirement
Savings: With lesser expenditure avenues we can allocate more towards savings.
Risk Profile: A lower age clubbed with long time to retirement means we can choose an aggressive asset allocation
Investment Philosophy
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Multi-cap orientation with a focus on building a Diversified portfolio of quality companies across sectors and market cap
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Blend of bottom up approach (for stock selection) and top down approach (for sector allocation)
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Quality orientation involves selecting companies run by professional managers backed by strong promoters
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Seeks to identify businesses with superior growth prospects and strong management available at reasonable valuation and offering higher risk adjusted returns
Instrument
Risk Profile
Range
Equity & Equity related instruments
Medium to High
80% – 100%
Debt & Money Market Instruments
Low to Medium
0-20%
in 40s
Aditya Birla Sun Life Retirement Fund –‘The 40s Plan’
This plan is also designed for wealth creation and capital growth over a long period of time but will have some exposure to debt & money market instruments with an aim to provide little stability to our money as wemove a little closer to your retirement.
Benefits of being in “40s”:
Time: Close to two decades until your retirement
Savings: While in ‘40s’ expenditures may have grown but so does the income, which allows to save & invest more towards our goals
Risk Profile: This period may warrant for ‘Step-Up’ (increase) in regular savings amount (SIP amount) but with a moderate to high growth orientation & risk.
Investment Philosophy
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Will invest in a mix of equities, bonds, money market instruments to achieve both growth & income, while attempting to minimize volatility
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Will seek to maintain a flexible equity exposure between 65-80% depending on the current market conditions.
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Debt portion of the portfolio will predominantly follow an accrual strategy with investment in quality corporate bonds and debentures.
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Equity component to be more quality focused while being diversified across sectors and market caps
Instrument
Risk Profile
Range
Equity & Equity related instruments
Medium to High
65% – 80%
Debt & Money Market Instruments
Low to Medium
20% – 35%
in 50s
Aditya Birla Sun Life Retirement Fund – ‘The 50s Plan’
This plan is designed for gradual and moderate growth with higher focus on preservation and consistency of growth. It is ideal for investors who are in their 50s and moving faster towards their retirement.
Benefits of being in “50s”:
Time: With the retirement nearing now, the need for regular & steady income asset class increases.
Savings: While in ‘50s’ the biggest benefit is that most of the other goals like buying house, children’s education may have been fulfilled. Income would be at peak and so can be savings for retirement.
Risk Profile: Regular investments (SIP) can periodically be topped up with lump-sum investments during 50s with a low to moderate growth orientation & risk.
Investment Philosophy
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The portfolio will be a mix of bonds, money market instruments & equity.
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Debt portion of the portfolio will predominantly follow an accrual strategy with investment in quality corporate bonds and debentures
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Focus would be on building a high-quality accrual portfolio for the recommended investment horizon.
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On the equity front, the fund will follow a multi cap strategy that is sector agnostic and seeks to generate alpha over a full market cycle
Instrument
Risk Profile
Range
Debt & Money Market Instruments
Low to Medium
75% – 100%
Equity & Equity related instruments
Medium to High
0-25%
in 50+
Aditya Birla Sun Life Retirement Fund – ‘The 50s Plus – Debt Plan’
This plan is especially designed for Retired people. It will seek to serve the need for preserving the retirement corpus and help it grow at a steady rate of return with an aim to securing regular income/cash flow.
In early 60s as Retirement approaches, a new inning of life begins:
Time: Some of your most pressing responsibilities are behind you. Now it’s the time to focus on the life you want to lead.
Savings: While your monthly income will cease, your monthly annuities that will come from your retirement corpus will give you peace of mind.
Risk Profile: Risk is minimized substantially, so that you can focus your attention on accomplishing your post retirement goals.
Investment Philosophy
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Corporate bond-oriented accrual portfolio is built when outlook on interest rates is stable with limited volatility expectation at the shorter end of the yield curve
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When interest rate outlook is bullish, a blend of accrual and duration strategy (only opportunistically) is deployed
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Focus is on building a high-quality accrual portfolio for the recommended investment horizon.
Instrument
Risk Profile
Range
Debt & Money Market Instruments
Low to Medium
100%
For Further details refer : SID / KIM
Retirement Fund Product Leaflet : Retirement Plan
Available Investment Options
Multi Plan SIP Facility
SIP can be done in more than one plan in this fund to avail the benefit of multiple asset allocations.
Lump sum Investments
Apart from SIP saving, lump sum money can also be invested from time to time in any plan of your choice in this fund. For example you can invest your performance bonus or any other lump sum money received in this scheme at any point of time.
Trigger Facility
This fund would facilitate seamless transition of risk profile and asset allocation. As one grows older and reaches new milestones of life, it calls for automatic changes in asset allocation (change of one plan to another). To illustrate, when you turn 40, the investment plan would automatically change from The 30s plan to The 40s plan. Similarly, the investment plan would change to 50s, as you turn 50.
Post Retirement Withdrawal Plan
Post Retirement regular monthly income can be built through Systematic Withdrawal Plan (SWP) linked with 50s Plus – Debt Plan
A feature of this scheme allows the Retirees to have a regular monthly withdrawal built through Systematic Withdrawal Plan (SWP) linked to the 50s Plus – Debt Plan.
The Plan lets the invested retirement corpus grow over time by parking it in Debt instruments, while facilitating a chosen amount of withdrawal every month into investor’s account. This serves as an income source to take care of investor’s retirement needs.
To illustrate let’s take case of Mr. Sharma, aged 60, who has recently retired and have accumulated Rs.5crores over his working life for his post retirement needs. Now he invests this money in The 50s Plus – Debt Plan and start withdrawing Rs. 200,000 every month for his family expenses.
Assuming, he continues with his fixed monthly withdrawals for his post retirement needs while his money grows at 7%p.a. under this plan for the next 20 years, he will still left with adequate corpus at the end of term:
Even post fixed monthly systematic withdrawals, there will be sufficient corpus left after 20 years as per the below table:
Monthly Withdrawal(INR)
Corpus after 20years(INR)
2,00,000
9.69 crores
2,50,000
7.07 crores
3,00,000
4.44 crores
3,50,000
1.82 crores
Initial Investment Amount
Rs.5 crores
Fixed monthly withdrawal
Rs. 2,00,000
Rate of return*
7% p.a.
Corpus after 20years
Rs. 9.69 crores
*Assumed rate of return is 7% p.a. The calculations are for illustration purpose only. Past performance may or may not be sustained in future.
This is for information purpose only. for more details visit official website of aditya birla sun life mutual fund.
