Apr 19, 2018 4 min read

Invest in Mutual Funds for Handling Mid-life Wealth Crisis by Taking Moderate Risks

Know how you can dodge the mid-life crisis and enjoy a happy retirement by taking a simple step today.
It’s the time of the year when almost every Indian cricket fan talks about just one thing, i.e., T-20 leagues. Since the inception of the game into international cricket, it has caught the fancy of every cricket fan and grown its popularity by leaps and bounds.

Talking of T-20 matches, it is often said that the middle overs usually don’t get too much attention, but it’s a fact that how well the teams strategize in the beginning and perform in the middle overs has a huge bearing on the result. Similar is the case with life as well. To make sure that you enjoy your retirement age and don’t face the drastic tides of mid-life wealth crunch, it is vital to plan in the beginning years strategically.

In such a case, mutual funds can be considered as a smart investment option. Now, the question that a conservative investor would ask will be, what if I suffer from losses?

So, Is Mutual Fund Investment Really Sahi Hai?

It is a hype that investment in markets is always a risky affair. Prudent investing considering one’s investment objectives and risk capacity can be highly rewarding, provided it’s clear where to invest. All you need to do is overcome psychological barriers and start investment asap. As there is no innovation without risk; taking a moderate risk with investments for longer tenure is often suggested even by experts. Furthermore, starting early is yet another critical factor that you must pay heed to.

Well, let’s understand its vitality via an example.

Sakshi Arora, 35, Assistant Manager at a private bank, started her career at the age of 25 and didn’t give much importance to investment due to low income and less risk-taking capacity. Now, with increased responsibilities and liabilities, she has developed a feeling of uncertainty. This is what experts term as Mid-Life Crisis.

If she had made a SIP investment of Rs 5,000 monthly in an equity fund which offered 12% returns on an average, she could have accumulated Rs. 1.77 crores till the age of 55. Thus, ensuring herself a sound mid-life and the life-after retirement as well. Starting up now will provide her with a corpus smaller by Rs 1.27 crores, i.e., about Rs 49.9 lakhs. Here, the magic of compounding could have worked as wonders for her. However, her ignorance has led her face the opposite.

This feature of mutual funds can be used to make a small sum of one’s income grow into a gargantuan amount in just 30 years. Thus, it won’t be wrong to say that the versatility and diversification of mutual funds enable them to meet all investment objectives for every investor. If the motive is handling mid-life financial crunches without going an aggressive path, then the basket of mutual funds include moderate-risk investment options as well. Here, Hybrid and Equity large-cap funds can be an ideal choice. These funds possess moderate risk and provide satisfactory returns by keeping a balance between both of the features.

*Returns: As on 10th April 2018 | Source: Value Research

*Risk: As of 31st March 2018 | Source: Morning Star

On analyzing the data related to the past performance and risk parameters of these products, it can be concluded they showcase consistent past performance and have a stable risk-reward ratio. They offered consistent risk-adjusted returns with low standard deviation with respect to the volatility of the market as well. Further, they witnessed the least drawdown as compared to the other options such as equity funds, debt funds, etc., which make them suitable for the investors who are looking to invest in moderately risky and high returning options.

Note: Standard Deviation is a risk measure that shows the volatility of the fund with respect to its mean.

Maximum Drawdown is the maximum negative returns of a fund in a given period.

How Has Industry Prepared itself to Help You Deal with Upcoming Crisis?

The experience of 2008 has made industry learn a bitter truth. It is ensuring to remain stick to the basic principles, thus staying disciplined amid the gush of liquidity. With the announcement of new rationalization and categorization rules of mutual fund schemes, SEBI has clearly distinct products concerning asset allocation, investment strategy, etc. These changes are executed to address the issue of mis-selling of mutual funds. There will be more eye on the prevailing risks than just chasing returns. Thus, it’s a good time to invest for investors looking for creating a corpus considering their risk profile, objectives, and tenure.


Planning for your future finance is the need of the hour. The research has found that a whopping 93% of those aged between 45-54 face difficulties in saving – or saving more – towards retirement. So, why wait? Start from right today and invest in a high paying and moderately risky mutual fund suitable to your life’s objective. In case you wish to seek any recommendation, connect with our experts. We are always there to serve you with all our might.

MySIPonline Register Account