Question: Which Debt Fund Is Better Than FD?

How do I choose a debt fund?

Choose a debt fund whose duration matches your financial needs.

Liquid and overnight funds carry the lowest credit risk, ultra short term to short term funds are moderately riskier, and the long duration funds carry the highest risk amongst the debt funds..

Do debt funds have lock in period?

Debt funds are very liquid, and can be redeemed easily, usually within one or two working days of placing the redemption request. Unlike bank fixed deposits or recurring deposits, there is no lock-in period.

Is there any risk in debt funds?

Investing in debt funds carries various types of risk. These risks include Credit risk, Interest rate risk, Inflation risk, reinvestment risk etc. But the key risks which needs be considered before investing in Debt funds are Credit Risk and Interest Rate Risk; Credit Risk (Default Risk):

Can debt funds give negative returns?

The duration funds which are running a maturity of more than 2 years and above are giving negative returns. Changing asset allocation can be disastrous for the investors as all asset classes have their ups and downs. Debt mutual funds are considered to be relatively less volatile than equity mutual funds.

Which is the safest debt fund?

Government securities are considered the safest options. The risk associated with corporate bonds depends on that company’s credit rating. For taxation purposes, all mutual funds with investments lower than 65% in equity instruments are considered debt funds.

Which type of debt fund is best?

Top 10 Debt Funds in IndiaFund3-Year PerformanceICICI Prudential All Seasons Bond Fund – Direct Plan – Growth9.98 %SBI Magnum Constant Maturity Fund – Direct Plan – Growth9.95 %SBI Magnum Gilt Fund – Direct Plan – Growth9.89 %DSP Government Securities Fund – Direct Plan – Growth9.88 %6 more rows•Jun 4, 2021

What is the best alternative to fixed deposits?

Equity FundsEquity Funds Forming an excellent alternative to the long-term fixed deposits, they are known for returns that are predominantly higher than fixed deposits. The risk level involved with equity funds is lower when it comes to long-term investments.

How do I choose a good debt fund?

Parameters to Pick the Best Debt FundAverage Maturity/Duration. … Interest Rate Scenario. … Current Yield or Portfolio Yield. … Credit Quality of Portfolio. … Assets Under Management (AUM) … Expense Ratio.May 30, 2021

Is it good to invest in debt funds?

Debt funds are ideal for achieving short term financial goals: Debt funds can be suitable for meeting short term goals . … Debt mutual funds have low risk ratio: Since these funds invest in fixed income securities, investing in debt mutual funds is considered to be far less risky.

Why you should not invest in fixed deposit?

While volatility is seen as a risk by many investing in mutual funds, inflation must be seen as a big risk for FD investments. If adjusted for inflation, fixed deposits actually generate negative returns. … This means the investment of Rs 10 lakh would grow to Rs 14.4 lakh after 10 years.

Where should I invest money to get good returns?

For those looking to get higher returns on their savings, here’s a list of the best investment options for you to make your wealth grow.Saving Account.Liquid Funds.Short-Term & Ultra Short-Term Funds.Equity Linked Saving Schemes (ELSS)Fixed Deposit.Fixed Maturity Plans.Treasury Bills.Gold.

Which bank is safe for fixed deposit?

Top 15 Banks and Their Interest RatesBank ListFor Regular Customers (% p.a.)For Senior Citizens (% p.a.)ICICI Bank2.50% – 5.35%3.00% – 5.85%State Bank of India2.90% – 5.40%3.40% – 6.20%Axis Bank2.50% – 5.75%2.50% – 6.50%Punjab National Bank3.00% – 5.30%3.50% – 5.80%9 more rows•May 4, 2021

Is it a good time to buy debt funds?

Current Account Balance: India’s Current Account balance is likely to be in surplus in FY21 due to sharp fall in imports. Current Account Deficit for FY22 is expected below 2% of GDP. That said, India’s FY22 Balance of Payment is likely to be in surplus due to strong FDI, FPI inflows and remittances.

Which is the best short term debt fund?

Fund3-Year Performance5-Year PerformanceICICI Prudential Short Term Fund – Direct Plan – Growth8.96 %9.58 %HDFC Medium Term Debt Fund – Direct Plan – Growth8.77 %9.39 %HDFC Corporate Bond Fund – Direct Plan – Growth8.77 %9.72 %Kotak Banking and PSU Debt Fund – Direct Plan – Growth8.76 %9.64 %6 more rows

What is average maturity in debt fund?

Average Maturity is the weighted average of all the current maturities of the debt securities held in the fund. The weights are the percentage holding of each security in the portfolio.

How many debt funds should I have?

So how many funds should one have in one’s portfolio: And ideal count in any portfolio is about 8 schemes, where you have different kinds of equity and debt funds. Also, ensure there is real diversification in your schemes and not just the same mandate with different fund names, Shweta said.

Are debt funds tax free?

Long term capital gains upto Rs 1 Lakh is totally tax free. … Short term capital gains (if the units are sold before three years) in debt mutual funds are taxed as per applicable tax rate of the investor. Therefore, if your tax rate is 30% then short term capital gains tax on debt fund is 30% + 4% cess.

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