Retirement planEdelweiss Mutual Fund has announced the launch of Retirement Plan, a new feature for retirement planning under its mutual fund schemes. This is a SIP feature built on life stage-based asset allocation model for retirement planning. The plan gradually shifts the investment portfolio toward lower-risk investments based on age and life stage as one approaches retirement. This is a first in the MF industry which focuses on life-stage based asset allocation for retirement planning. Individuals and NRIs are allowed to invest under this facility. Let us understand how Edelweiss Retirement Plan works. Read on to know more.

Address 3 areas

Edelweiss ‘Retirement Plan’ as an investment facility addresses three key phases of retirement planning — Accumulation (invest in predefined mix of equity & fixed income/debt scheme through SIP), Preservation (portfolio rebalancing based on life stage to preserve wealth) and Distribution (start withdrawal at a set % and enjoy regular income at retirement).

Life stage concept

Edelweiss ‘Retirement Plan’ works as per the life stage asset allocation model. The life stage concept works on four key principles.

1. Young can take more risk – When you are young and starting out, you can invest in more aggressive investments.

2. With age, conservatism sets in – As you get closer to retirement, you tend to shift investments to more conservative investments.

3. Age decides mix – Investments should be divided into equity and debt/fixed income depending on your age to reduce portfolio volatility.

4. Pension – Once you accumulate retirement corpus, you can then enjoy cashflows through regular payouts after retirement.

Minimum age of investor to opt for this facility is 18 years. The asset allocation will remain static until the age of 30 years and life-cycle based asset allocation changes will start after the age of 30 years.

Two Options – Auto & Custom

The Edelweiss ‘Retirement Plan’ gives investors enough flexibility. This plan enables investors to plan their retirement by allocating their investments in select open-ended debt and equity Schemes of Edelweiss Mutual Fund by investing through Systematic Investment Plan (SIP) route.

This plan provides two asset allocation options – ‘Auto Option’ and ‘My Custom Option’.

1. ‘Auto Option’ gives a predefined asset allocation at every age. This option is the default setting. The portfolio will auto rebalance at set frequency during your investment period. Investment logic is pre-defined by the AMC as per thumb rule of Retirement Planning i.e. Equity Allocation = (110 – Age).

It provides a pre-defined asset allocation between equity and fixed income schemes at every age and portfolio rebalancing between equity and fixed income every five years starting from the age of 40. Investor up to the age of 50 years can invest under the ‘Auto Option’.

While life-cycle based asset allocation changes will start after the age of 30 years, if an investor opts for this facility before attaining 30 years age, then the asset allocation will remain at 80% equity and 20% debt till the age of 30 years and will subsequently change as per his/her age.

Minimum tenure of investment is 60 months. Post that further investment can be stopped, although rebalancing will continue.

How To Do It – You choose from any eligible scheme as per your choice. Next, select the SIP amount. Then, choose the date and frequency of the SIP. That’s it – the job is done.

Take a look below to see how the Auto Option works.

Edelweiss retirement plan

2. ‘My Custom Option’ provides flexibility to customize equity and debt allocation as per risk appetite and the tenure of Investment. This means you customize your asset allocation as per your own risk profile. Also, you rebalance the portfolio as per your own life stage and risk appetite.

The ‘My Custom Option’ is all about flexibility to choose your own defined asset allocation. You can define the start and end equity and fixed income asset allocation for your SIP investments.

Your asset allocation glide path between equity and fixed income schemes will be created through your SIP tenure. Investor up to the age of 55 years can invest under ‘My Custom Option’.

Do remember that there is a minimum investment amount (Rs 2,000 to Rs 10,000 per month & Rs 6,000 to Rs 10,000 per quarter) under ‘My Custom Option’. This has been put to meet the investment criteria of the individual scheme, the minimum amount of investment and installments.

How To Do It – You choose from any eligible scheme as per your choice. Next, select the SIP amount and frequency of investment. Then, select start and end asset allocation.

Take a look below to see how the My Custom Option works in one scenario.

Edelweiss retirement plan my custom option

RupeeIQ take – Edelweiss MF rightly calls this as a” fill it, shut it, forget it retirement plan”. It is indeed a single solution providing exposure to a diversified portfolio with an in-built asset allocation mechanism. The auto-rebalancing of the portfolio (under Auto Option) at set frequency cuts risk as you approach retirement. There is a lot of flexibility to choose from different Edelweiss Mutual Fund schemes under equity and fixed Income as per our own choice. In terms of equity schemes, you can select all open-ended equity schemes of Edelweiss Mutual fund except Edelweiss Long Term Equity Fund (Tax Savings), Edelweiss ETF – Nifty 50, Edelweiss ETF – Nifty Bank and Edelweiss ETF – Nifty 100 Quality 30. In terms of debt schemes, you can choose from all open-ended fixed income schemes of Edelweiss Mutual Fund.

The flexibility to customize asset allocation as per your risk appetite and the tenure of investment under the custom option is suitable only for experienced and trained investors. If you are new to investments, please stick to the ‘Auto Option’.

Investors may like to know that PFRDA run NPS also has ‘Active Choice’ and ‘Auto Choice’ approach.

Disclaimer: The article is only for informational purposes. Investors are requested to consult their financial, tax and other advisors before taking any investment decision.

Kumar Shankar Roy

Kumar Shankar Roy is contributing editor with RupeeIQ. He can be contacted on