Investing in BAFs for a comfortable retirement: Funding your retirement dreams with Rs. 5 crores

Retirement planning is crucial in India as there is no social security system and most people rely solely on their savings. With increasing life expectancy, rising healthcare costs, and inflation, a retirement corpus of at least Rs. 5 crores is advisable to maintain your lifestyle.

Understanding balanced advantage funds (BAFs)

Balanced mutual funds dynamically manage the equity and debt allocation based on market valuations. When markets are expensive, equity is reduced to minimize downside. When markets are attractive, equity is increased to generate higher returns. This enables participating in equity upside while limiting volatility. BAFs are ideal for retirement as they balance growth and stability.

Stock Market Investment

Building your retirement corpus

Assuming you start investing at 30 and retire at 60, you need to invest Rs 1.2 lakhs monthly to accumulate 5 crores. Alternatively, starting early with Rs 60,000 monthly can also achieve this target. The key is disciplined investing from an early age and choosing the right investment products.

Why BAFs are suited for retirement investing

BAFs offer stability with growth, making them ideal for long-term goals like retirement. The dynamic asset allocation manages volatility and reduces retirement corpus erosion from market downturns. The multi-asset structure provides diversification along with a lower risk profile compared to pure equity funds. BAFs optimize returns while minimizing risk – essential for retirement funds.

Choosing the right BAFs

Opt for BAFs from reputed fund houses with a long track record. Choose funds with assets under management of over 5000 crores for good liquidity. Analyze the past performance across market cycles. Select BAFs with lower volatility and consistent returns of 10-12% over the long term.

Allocating your retirement corpus across BAFs

Don’t put your entire retirement corpus in one BAF. Allocate across 4-5 BAFs from different fund houses for diversification. Moderate allocation of 20% in each BAF totalling 80% of your retirement corpus is ideal. You can invest the balance 20% in liquid and debt funds to cover 2 years of expenses.

Managing your BAF investments

Stay invested for the long term to benefit from rupee cost averaging and compounding. Use SWPs to withdraw amounts to meet expenses without redeeming fund units. Invest surplus savings to top up your corpus. Rebalance occasionally to keep allocations in line with asset targets. Track BAF performance, but don’t time the markets.

Mitigating risks

BAFs carry market risk like any equity investment. However, the debt component reduces volatility. The portfolio is also well diversified across sectors and market caps. Investing in BAFs from different AMCs also minimizes concentration risk. Maintain emergency reserves to avoid redeeming BAF units in down markets.


Starting early, regular investing, staying invested long-term, and prudent fund selection are key to building your 5-crore retirement corpus with BAFs. Maintain discipline, avoid impulsive decisions while you invest in mutual funds, and your retirement dreams can be realized with BAFs serving as the stable growth engine.

Alka Saha has done Masters in Computer Science from University of Delhi, India. She is a passionate blogger, technology lover, plays chess, innovative, likes to express her views via blog and is a music lover. She has been blogging since 2011 and has contributed a number of great articles to the internet.