Why you need mutual funds for retirement planning
For most of you, holding an EPF account with your company or investing separately in PPF could be the only retirement plan in place. This means of saving may have held water about a decade ago. But for the upcoming generation of retirees, dependence on EPF and lack of pension may mean that they are at a real risk of falling short of capital, post retirement. Just take a look at the kind of returns that your Employee’s Provident Fund (interest declared by the central government) was delivering about 2 decades ago and how steadily the rates have been declining. This is no different with your PPF account. At the same time, consumer price inflation (CPI) has been on the rise, particularly in the last 5 years and has crept to an average of 10.2% in the last 5 years (taking the old CPI rates for Industrial workers, as the new CPI is available only from 2011). That means, your net returns from your provident fund or PPF would actually be negative! Now, if you have not built enou...