Is it right time to invest in debt mutual funds?
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Debt mutual funds are high in demand right now and it's a great time to buy. But, it's not the best time to invest as debt mutual funds will be low on returns in the next few quarters. So, I would go for stocks.
Debt mutual funds are high in demand right now and it’s a great time to buy. But, it’s not the best time to invest as debt mutual funds will be low on returns in the next few quarters. So, I would go for stocks.
See lessDebt mutual funds are a great way to earn good returns in your 20's. In fact, their compounded annual rate of return is higher than equity mutual funds. The foremost reason is that they are less volatile as compared to equity mutual funds.As an investor, you should not be too concerned about the volRead more
Debt mutual funds are a great way to earn good returns in your 20’s. In fact, their compounded annual rate of return is higher than equity mutual funds. The foremost reason is that they are less volatile as compared to equity mutual funds.As an investor, you should not be too concerned about the volatility of debt mutual funds as they are performing adequately with low risk taking limits. This can be checked through the fund’s risk parameters and the tenor (debt maturity) of the scheme.However, it is important for you to check on the duration that your debt schemes have taken so that you yourself know how long you will require to repay the principal amount.Short-term debt instruments have a high degree of risk associated with them which may lead to default if there was a deterioration in economic conditions or expectations resulting from external factors like an oil price shock or currency crisis among others. An increase in inflation would also affect consumer confidence which could result in severe fall in demand and consequently reduce competitiveness and raise input prices thereby increasing costs and hurting margins further leading to reduced revenues, increased working capital requirements and hence increased interest burden (higher borrowings) which would lead us into another spiral of increased cost, lower revenues and higher interest burdens etcete
See lessThe best time to invest in debt funds is when you have saved enough for the future, but still feel the urge to invest.For example, my wife and I ended up investing about Rs 20 lakh each in a debt fund. We did so because we are seeing our own investments grow by around 10% annually and we wanted to bRead more
The best time to invest in debt funds is when you have saved enough for the future, but still feel the urge to invest.For example, my wife and I ended up investing about Rs 20 lakh each in a debt fund. We did so because we are seeing our own investments grow by around 10% annually and we wanted to be conservative with our capital growth.Many people use credit cards as a source of capital, but they fail to see that every month they are paying interest on it (sometimes even more than the interest paid on their car loan). In contrast, if they invested that money at 8-10% returns on maturity, they could end up saving tens of thousands of dollars over their lifetime.As an alternative to debt funds, you can consider equity-oriented mutual funds – largely because you will get better diversification than in debt funds and these usually have lower fees too.
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