Trying to make your retirement financially secure? Check out this index fund
Many people wish to be secure in retirement. But you can most likely achieve it through disciplined investment in this index fund via SIP. Continue reading to learn more about this fund.
People's lives after retirement are insecure as a result of a lack of financial literacy. According to the study by Max Life Insurance 45 per cent of people rely on their children for retirement. Almost 56 per cent believe that savings will deplete within 10 years of retirement.
Retirement is a foregone conclusion. Yet there is a good chance that you will continue to live even after you retire. As a result, you will incur expenses long after you retire.
The cost, in this case, could be both expected and unexpected. Home costs, discretionary costs, children's education fees, EMI, etc. are all expected costs. Unexpected costs include medical expenses, a fund to compensate for job loss, and so on. Thus, you need to have a retirement plan in place to pay for these expenses.
But, investing Rs 5,000 per month for 30 years via SIP in UTI Nifty 50 Index Fund accumulates to Rs 1.5 crore. This is assuming a 12 per cent compound annual growth rate (CAGR). Yet, the question is whether this fund has the potential to generate these returns. Let us investigate.
Nothing better than analysing the fund's rolling returns to understand its consistency. So, from August 21, 2012, to August 17, 2022, we examined the Net Asset Value (NAV) data of the UTI Nifty 50 Index fund.
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UTI Nifty 50 Index Fund
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1-Year
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3-Year
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5-Year
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7-Year
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Median Rolling Returns (%)
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12.7
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11.8
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12.8
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11.7
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Minimum Rolling Returns (%)
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-33.0
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-5.0
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-1.6
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4.5
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Maximum Rolling Returns (%)
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95.0
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22.6
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18.5
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15.1
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Number of times rolling returns were negative (%)
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15.2
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1.3
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0.3
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0.0
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According to the above table, the median returns are in the range of 12 per cent to 13 per cent. Except for the One-Year period, the chances of negative returns are quite low in all other periods. Seven years or more is preferable because the risk of negative returns is low.