Good debt funds to invest in india

For reprint rights: Times Syndication Service. The securities, papers, bonds, instruments, etc. The actual mutual fund investment process can be initiated and maintained in two methods: Lump Sum investing: This method is for when you wish to invest your corpus money at one shot.

Why To Invest in Debt Mutual Funds?

Income funds are a type of debt mutual fund that attempts to provide a stable rate of returns in all market scenarios through active portfolio management. While it is a debt fund, income funds also run the risk of generating negative returns as many scenarios could play out — such as — interest rates may drop drastically, resulting in a drop of the underlying bond prices. The entire point of investing in a liquid fund is to maintain a high degree of liquidity i. Securities and instruments that are invested in by liquid fund schemes have a maximum maturity period of 91 days. Usually, only very highly-rated instruments are invested in, through good debt funds to invest in india funds. The benefit of these funds is primarily felt by those investors who have surplus funds to park in an income generating investment.

Our list of top mutual fund schemes that you may consider to invest in 2019.

Best debt funds vary according to the tenor of investment of the investor. Investors need to be clear on their time horizon of investment when selecting the best Debt fund for their investment and also factor in the interest rate scenario. For investors with a very short holding period, say for a couple of days to a month, Liquid Funds and ultra- short term funds may be relevant. When the time horizon is one to two years then short-term funds may be the desired vehicle. For longer tenors, for more than 3 years, long-term debt funds are the most preferred instruments by investors, especially during falling interest rates.

Income funds are a type of debt mutual fund that attempts to provide a stable rate of returns in all market scenarios through active portfolio management. While it is a debt fund, income funds also run the risk of generating negative returns as many scenarios could play out — such as — interest rates may drop drastically, resulting in a drop of the underlying bond prices.

The entire point of investing in a liquid fund is to maintain a high degree of liquidity i. Securities and instruments that are invested in by liquid fund schemes have a maximum maturity period of 91 days. Usually, only very highly-rated instruments are invested in, through liquid funds. The benefit of these funds is primarily felt by those investors who have surplus funds to park in an income generating investment. The reason these are preferred is that they give higher returns than savings accounts and attempt to provide a similar level of liquidity.

These funds are the riskier type of debt mutual funds. They undertake calculated risks like investing in lower-rated instruments to generate potentially higher returns. These fund schemes are popular among new investors who want a short term investment with minimal risk exposure. The securities, instruments, papers. These schemes invest primarily in government-issued securities which carry a very low level of risk and are generally rated quite high as the default rate is very low and sometimes non-existent.

What these schemes lack in risk-taking ability, they more than make up for, in security. Fixed maturity plans can be closely likened to fixed deposits. These schemes have a mandatory lock-in period that varies depending on the scheme chosen. The investment must be done once, during the initial offer period, after which further investments cannot be made in this scheme.

The way in which it differs from FDs is that the returns are not guaranteed, but if they do generate positive returns, they will be most likely higher than any bank FD scheme. This refers to the time in which you wish to achieve your financial goals through investments. Debt mutual funds have schemes that fit almost any investment horizon — like liquid funds for 3 — 12 months, bond funds for 24 — 36 months, dynamic bond funds for 36 — 60 months.

This is the primary purpose of investing in debt mutual funds, and the factor based on which most people pick their schemes. Despite the fact that debt fund schemes aim at reducing the risk and establishing regular returns, nothing in the world of mutual fund investing in guaranteed.

Debt mutual fund schemes are also liable to be charged capital gains tax. The primary benefit of debt funds is the extremely low risk to which they expose their capital. Even so, debt schemes are not risk-free — suffering from two very distinct and real types of risk.

Interest risk is another very real risk of debt funds wherein an increase in the interest rates would drastically lower the value of related bonds. Debt mutual fund schemes are often seen as an alternative investment to fixed deposits — as they provide income over time.

While it is true that long-term and short-term capital gains tax does apply on debt mutual fund schemes, it should be noted that the benefit of indexation increases after three years of holding and with each passing year after.

Also, debt schemes are not affected by TDS. Alternative investment options like fixed deposits have a straight deduction of The income on fixed deposits is also taxed every year from the start of the deposit, but the total money earned will only be accessible on plan maturity.

Alternative investment options do not provide this level of flexibility to investors — e. When compared to the traditional options like savings bank accounts or fixed deposits, debt mutual funds offer the possibility of far higher returns. Built on robust technology, FundsIndia gives users access to mutual funds from leading fund houses in India, stocks from the BSE, corporate fixed deposits and various other investment products, all in one convenient online location.

In short, FundsIndia is your one stop shop to build wealth. Mutual fund investments are subject to market risks. Please read the scheme information and other related documents carefully before investing. Past performance is not indicative of future returns.

Please consider your specific investment requirements before choosing a fund, or designing a portfolio that suits your needs. Wealth India Financial Services Pvt. It accepts no liability for any damages or losses, however caused, in connection with the use of, or on the reliance of its product or related services. Terms and conditions of the website are applicable.

Apple and the Apple logo are trademarks of Apple Inc. App Store is a service mark of Apple Inc. The Android robot is reproduced or modified from work created and shared by Google and used according to terms described in the Creative Commons 3. SEBI Reg. Full Name. Email ID. Debt Funds What are debt mutual funds? Mutual funds investment gather money from a lot of investors and create a corpus.

The corpus i. While there is no guarantee that any mutual fund scheme will achieve its goals due to the factors of risk and ever-fluctuating markets, debt mutual funds strive to minimize risk by picking the least risky types of investment instruments.

Debt mutual funds invest the majority of their corpus in fixed-income or fixed-interest generating opportunities and instruments.

Some examples of the instruments debt funds invest in are — money market instruments, corporate bonds, treasury bills, government securities, commercial papers. By investing primarily in these opportunities, debt mutual funds reduce the risk factor by a huge margin. As a result of this, the mutual fund scheme also reduces its chances to generate exponential returns like those of successful equity fund schemes.

Debt funds are different from equity funds in many ways — the primary of which is the chosen investment instrument or opportunity. Unlike equity mutual fund schemes that seek to gain capital appreciation through investments in the equity stocks of companies, debt mutual funds attempt to deliver stable and good debt funds to invest in india returns that are usually better than fixed deposits.

The reason that they are able to do this is that they invest in instruments that provide a fixed rate of returns. While this rate of returns is usually quite low, risk-averse investors prefer this form of investment as it does not place their investment at a great deal of risk.

The choice and decision of which debt instruments will be purchased by a fund scheme are dependant on its credit rating. Credit ratings for debt instruments and securities indicate the likelihood of the instrument to honour its interest payments and the eventual principal repayment at maturity. The higher the credit rating, the greater the likelihood of the interest and principal being repaid on time and in.

So, the higher the rating of the debt instruments chosen, the lesser the risk that the mutual fund may not receive all its dues. Income Funds: Income funds are a type of debt mutual fund that attempts to provide a stable rate of returns in all market scenarios through active portfolio management. Liquid Funds: The entire point of investing in a liquid fund is to maintain a high degree of liquidity i. Credit Opportunities Funds: These funds are the riskier type of debt mutual funds.

Short-Term and Ultra Short-Term Debt Funds: These fund schemes are popular among new investors who want a short term investment with minimal risk exposure. Gilt Funds: These schemes invest primarily in government-issued securities which carry a very low level of risk and are generally rated quite high as the default rate is very low and sometimes non-existent.

Fixed Maturity Plans: Fixed maturity plans can be closely likened to fixed deposits. Risk-averse investors generally choose to invest in debt fund schemes. Investors that are happy with the possibility of a low, but regular rate of returns versus high-risk exposure capital appreciation equity funds choose debt fund schemes.

You prefer the possibility of small but stable returns over the possibility of large capital appreciation. You are unhappy with the current rate of returns provided by your savings bank account. You wish to earn higher returns than an average fixed deposit scheme.

You wish to supplement your current income — i. The securities, papers, bonds, instruments. Returns: This is the primary purpose of investing in debt mutual funds, and the factor based on which most people pick their schemes. Tax liability: Debt mutual fund schemes are also liable to be charged capital gains tax. Risk: The primary benefit of debt funds is the extremely low risk to which they expose their capital.

Invest in debt mutual funds in under 30 minutes by: Step 1: Logging on to www. Step 5: Invest, sit back and let the debt mutual funds do their thing — which is — attempt to generate a small but resilient stream of income through informed investments in debt instruments. You can watch your money grow on the FundsIndia investment dashboard — either online or on your smartphone through the FundsIndia app.

You can track and manage your investments in the highly intuitive app-based interface. Buy, sell, trade at the touch of a button. The actual mutual fund investment process can be initiated and maintained in two methods: Lump Sum investing: This method is for when you wish to invest your corpus money at one shot.

Systematic Investment Plan investing: SIP is for when you wish to invest small amounts of money at regular intervals for a specific tenure. But this approach cannot be taken for investments in fixed maturity plans — as the investment has to be done during the initial offer period.

Both these methods of investing have their benefits and drawbacks and can be further pursued. Debt fund schemes have many advantages, depending on the type of investor you are:.

High liquidity: Debt mutual fund schemes are often seen as an alternative investment to fixed deposits — as they provide income over time. Tax efficiency: While it is true that long-term and short-term capital gains tax does apply on debt mutual fund schemes, it should be noted that the benefit of indexation increases after three years of holding and with each passing year after.

Higher returns: When compared to the traditional options like savings bank accounts or fixed deposits, debt mutual funds offer the possibility of far higher returns. One can invest in debt mutual funds through an SIP or through a lump sum investment, both of which have their own benefits and drawbacks. Bear in mind, however, that some types of debt mutual fund schemes like Fixed Maturity Plans cannot be availed through the SIP method.

To learn the potential value of your investment into a mutual fund scheme on redemption, use our state-of-the-art mutual funds calculator. Create a Free Account.

Risks In Debt Mutual Funds

Reliance Arbitrage Fund. This will alert our moderators to take action Name Reason for reporting: Foul language Slanderous Inciting hatred against a certain community Others. For example, overnight funds and liquid mutual fund schemes are the least risky among debt mutual fundswhereas credit risk schemes can be highly inevst. Become a member. The benefit of these funds is primarily felt by those investors who have surplus funds to park in an income generating funfs. You can watch your money grow on the FundsIndia investment dashboard — either online or on your smartphone through the FundsIndia app. Franklin India Income Opportunities. Asset size: For Hybrid funds, the xebt asset size is Rs 50 crore. Long Duration Funds. The way in which it differs from FDs is that the returns are not guaranteed, but if they do generate positive returns, they will be most likely higher than any bank FD scheme. Consistency in the last three years: Hurst Exponent, H is used for computing the consistency of a fund. App Store is a service mark of Apple Inc. That is why it is extremely important for investors to keep their risk appetite in mind while inda a mutual fund scheme.