Jan 01, 1970 3 min read

Why Should One Invest in Debt Funds?

If you are looking for making a worthwhile investment to earn fixed income return, then debt funds are the best one for you. Read this blog to know who should invest in it and what does it provide.
Are you looking for a source to earn regular and fixed income? Do you know how you can earn that? We have explained here a way that can help you make a better future.

We all earn recurrent income through various sources. Whether it be in the form of our salary, interest on bank accounts, rental income or any other way. But still, we lack in the financial stability. The reason being is that we want to have some more. So, here we have provided reasons for why one should opt for debt funds and how they would be helpful for you to make good money and earn financial soundness.

The mutual fund programme provides the best solution to one for attaining the investment goals in life. Although an investment for a long-term duration pays the best return, but MF provides the solution for the current needs as well. Not everyone desires to make a long-term investment and believes in fetching the short-term investment benefits. To cater such needs of various investors, the ‘Debt Fund’ category has been formulated.

So, before we proceed towards the benefits of fixed income funds, first let us know who should consider for investing in them. If you fulfil the below-mentioned parameters , the debt funds are the best ones for you.

  • Your investment goals are less than five years away.
  • You do not want to get affected by the market volatility and willing to adjust your growth accordingly.
  • Your growth objectives can be met with comparatively fewer interest rates.
  • You want to earn assured post-tax returns.
  • You want higher liquidity and flexibility in your investment.

Henceforth, if you too are in this position and want to make good money in the short run, then you must go for a programme that can assure you with it. And, the ´Debt Fund´ offers the same. To know how you can make a worthwhile investment for a short-term period and make money to sustain financial soundness, read this further.

As we know that, investments are made to fulfil the desires in life. And if it is made with due care, it produces even more than what we expect for. So, let us know what are the various features of debt funds, that make them preferable among all other short-term investment programmes.

Safety of Capital: The most important trait of this kind of fund is that it is not prone to market fluctuations that much, which means it is less volatile. Henceforth, helps in securing the money of investors, which has been invested in its schemes.

Tax Efficient: In the long term, i.e., more than a year, debt funds are helpful in managing taxes as well. The income from a debt fund after one year of investment is treated as long-term capital gain which is taxed at either 10% or 20% after indexation. The longer you hold a debt fund, the bigger is the indexation benefit. In addition, there is no tax deducted at source in this category.

Liquidity: Most of us wants to get into a liberal investment structure, which is not rigid at all. The schemes falling under the debt fund are highly liquid in nature and offer easy cash convertibility to the investors. In addition, they offer a flexibility of redeeming the funds and convert them into cash as and when required.

Higher Returns: In the case of debt funds, the interest rate fluctuations have some impact on the performance of the schemes. Accordingly, in the case of high-interest rates prevailing in the market, the returns generated by the debt funds are highly appreciable which help one in growing one´s money.

So, if you are looking for making a worthwhile investment to earn the benefits of recurrent income with high growth in capital, then you must opt for the debt fund plans. It would add value to your portfolio and provide financial stability.

If you need any personal financial advisory service while making a choice of a scheme in the debt funds, then we, at MySIPonline, would definitely help you out in making the best investment.

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