Debt Funds Better than Bank Deposits

Debt FundsDebt Funds is one of the important thing about Personal Finance. Yes. As I have mentioned in many of my articles that Mutual Fund is the best investment, because it caters to the needs of all types of investment requirements. I have explained in detail about the reasons of investing in mutual funds in my article 10 Reasons to Invest in Mutual Fund.

In this article I wish to specifically discuss about the debt funds, i.e Debt Mutual Funds. We all are aware of Equity Funds. i.e the mutual funds which invest in equity market i.e shares and securities. Yes Equity Funds are very useful because they have given excellent returns in past and I am sure even in future also they will do the same. But equity funds are subject to market risk, so many people are not comfortable with the equity investment. There are so many people who are comfortable to invest in Fixed Income securities only. For these people debt fund is the best option to invest. Debt Funds invest in Fixed Income securities and not in equities. They invest in Government Securities, Company Deposits,etc. Following are the best reasons to invest in debt mutual funds.

  1. Debt Funds, are better for Risk Averse Investors:

    As debt funds do not invest in equity funds, there are very negligible chances of loss of principal, because the investment in fixed income securities.So for the risk averse investors this is the best investment.

  2. Professionally Managed:

    Yes! All the mutual funds are professionally managed. And that is the biggest advantage of investing in Mutual Fund. The Mutual Fund Houses have to face competition because there are so many good peer funds. This makes the fund manages to give best of their knowledge and expertise, which result in better investment returns

  3. Transparency and Good Governance:

    In India Mutual Funds are governed and monitored by the SEBI i.e. Securities and Exchange Board of India. So the these mutual funds are abide by  the statutory requirement of disclosures and regular reporting. this brings the transparency for the investors. 

  4. Liquidity:

    This is the biggest advantage of Debt Mutual Funds. The amazing thing about the debt mutual fund is that they give provide safe investment, good returns and liquidity also. I am sure there is no any other investment avenue which provide all these three things together. These funds are open ended,and one can purchase and sell them anytime. this makes this investment very attractive.

  5. Debt Funds – Excellent Returns:

    Most of the Debts Funds in India have given excellent returns which are far better than the Bank Fixed Deposits. Most of the funds have given the attractive returns. This is really very good considering the safety of the principal.

  6. Tax Benefit:

    This is additional advantage of investing in debt mutual fund compared to fixed deposit, because in fixed deposit the income is in the form of interest. And in case of debt fund the income is in the form of capital gain, and this makes this investment advantageous even from the point of view of taxation also.

  • Hope this article gives you better picture of the Debt Fund investment. And I am sure if you like it you would love to share the same!

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