Short Term Money

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What are debt funds?

Debt funds are mutual funds that invest in fixed income securities like treasury bills and bonds. They are generally safer than equity mutual funds. Debt funds are often seen as a tax-efficient alternative to bank FDs. Debt funds invest in...

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Why should I invest in debt funds?

Debt funds are an ideal investment option for people who are looking for reasonable returns that match inflation with safety of capital. They are an excellent alternative to FDs because they provide higher post-tax returns, on-demand liquidity and, with careful...

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What is the ideal time frame for debt investments?

Debt fund investments are liquid in that you can invest for any amount of time. The ideal time frame is 3-5 years where debt funds provide maximum advantage. For investments longer than 5 years, you could consider Equity funds as...

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Do debt funds provide guaranteed returns like bank FDs?

No. Debt funds do not guarantee returns. Return from debt funds come with increase in value of the fund and NOT interest income. Historical debt funds’ performance has shown that returns are at par with bank FDs and even better after tax....

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How should one choose between Equity and Debt when it comes to investments?

For short term investments (less than 5 years), choose debt funds and for goals longer than 5 years, choose equity. Some investors may choose debt funds for longer investments as well because they would like more certainty. In that case...

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