How conservative hybrid funds help you in achieving your retirement corpus?

Mutual fund is one such rare asset-class which has various kinds of products which caters to almost all of the risk categories, then be it conservative risk taker or aggressive risk taker or even super aggressive risk taker. So you can say that the mutual fund is a one-stop shop for all your investment needs. Though one must also consider the risks associated with it to choose what better suits your requirements.
 
So how can you achieve your retirement corpus the conservative way with the help of conservative hybrid funds? Let’s take an example to understand it better. Assume that currently, your age is 30 years, retirement is at 60 years and monthly expenses stand at Rs. 30,000 per month which we assume would increase with an inflation rate of 7 per cent now and in the post-retirement period. It is even assumed that post-retirement you would stay conservative and invest in avenues fetching 8 per cent returns and your life expectancy is expected to be up to an age of 85 years. So now you have 30 years as per retirement period which you would use to accumulate the retirement corpus which would help you survive 25 years of the post-retirement period. Based on the above details, your retirement corpus works out to be Rs. 2.31 crore. This means that you would require Rs. 2.31 crore at your retirement age of 60 which in turn would be invested at the rate of 8 per cent post-retirement to withdraw the desired amount.
 
Now, can an investment in conservative hybrid fund help you achieve the retirement corpus of Rs. 2.31 crore? To know that let's find out how the conservative hybrid funds have performed in its 1-year, 3-year and 5-year period. The average returns these funds have given in 1-year, 3-year and 5-year stand at 1.64 per cent, 8.82 per cent and 10.46 per cent, respectively. So if we assume that it would continue to perform the same way and take annualized rate of return of 10 per cent then to achieve Rs. 2.31 crore you need to do monthly SIP of Rs. 11,100 until you turn 60 or you may also opt to invest one-time i.e. lumpsum of Rs. 13.27 lakh and stay invested until you turn 60.

Considering this, we can say that yes, you are able to achieve the retirement corpus being conservative by investing in a conservative hybrid. However, it is to be remembered that this is only for people who are conservative risk takers. For aggressive risk takers considering such a long time horizon, they must invest in mid-caps and small-caps with little or no allocation to large-caps or they may also consider investing in thematic funds. So this fund is not meant for aggressive risk takers.