Sunday, October 9, 2011

Tata Retirement Savings Fund - Analysis, Review, Recommendation

Tata Mutual Fund has launched an open ended scheme called "Tata Retirement Savings Fund" aimed to provide long financial security for individuals. The scheme is specifically designed keeping in mind the young and middle aged working generation and is tailor made to support the monetary needs of investors post their retirement.

The scheme offers an auto-systematic withdrawal facility and is designed with an objective of providing the investors with regular cash flows after they turn 60. It comes with two options:
Monthly - one per cent of market value of investment as on date of completion of 60 years
Quarterly - three per cent of market value of investment as on date of completion of 60 years

The new fund offer (NFO) opens on 7 October and closes on 21 October, 2011. The minimum initial investment amount for the fund is Rs 5,000 and Rs 500 per month. The new issue price for the scheme is Rs 10 per unit.

The fund offers life cycle linked plan and comes with three options - Progressive plan, moderate plan and conservative plan with varied percentage of equity and debt assets. The investor also has the facility of an “Auto-Switch” feature where the fund does the necessary asset allocation automatically as the investor crosses into a different age bracket.

With increasing life expectancy, one can assume a post-retirement life of 30 years after 30 earning years. The challenge clearly is the ability to maintain the same life style post retirement. This may sound like future shock, but it is the reality of life. Therefore, it is crucial to plan for retirement. The approximate number of senior citizens has already gone up from 71 million in 2001 to 100 million in 2011 which is 14% of the population and is expected to go up with increasing life expectancy.

Currently, Tata Mutual Fund has about Rs 23,000 crore assets under management across its various products.


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