Debt funds market is one of the major market where peoples invest their to get profit on their investments. When companies want to raise funds for the projects they issue debt instruments so that they can borrow money from their investors.
If you are looking for a secure investment without any risk than debt market investment can be the option for you, usually debt markets has lower risk of loss as compare to equity (share) market but debt market offers you lower returns on your investment as compare to equity market because equity market has high volatility.
Debt funds refers to investment in a company which can generate fix income for you and These investments can be in form of corporate bonds, treasury bills, commercial papers and various other market instruments.
These instruments commonly have pre-decided maturity date and investor gets fixed interest rate on its investment upon maturity date. Your investment in debt market is not affected by ups and down of markets therefore you get fixed stable returns on your investment with lowest risks.
Who should go for debt funds investment?
This market is one of the best choices for those who want lowest risks on their investment. These investment schemes often come with various time frames such as short-term investment and medium term investment.
Short term investment (3-12 months) – If you keep your money in regular saving account it offers you very little profit whereas if invest your money in debt market for short period of time it may offer your up to 7-9% returns.
Medium term investment (3-5 years) – I you want to invest your money for medium term than first option may come to your mind is fixed deposits (FDs) but investment in debt market for similar period of time can offer you better returns and you also has monthly pay out option in which you can get monthly return on your investment.
Types of Debt Funds
Debt funds are classified into various categories
Liquid fund – In this scheme you invest your money in money market instruments with maximum maturity period of 91 days.
It can be a good short term investment option and can provide better returns than money in saving account.
Ultra short duration fund – It is one of the good short term investment option and investment lock in period between 3 to 6 months.
Short duration fund – In short duration fund scheme you invest your money in debt securities for the time frame of 1 to 3 years.
Medium duration fund – In medium duration fund scheme you invest your money in debt securities for the time period of 3 to 4 years.
Medium to long duration fund – This is a good investment option for those investors who are willing to invest their money for time period of between 4 to 7 years.
Money market fund – This option is good if you are looking to invest your money for period of 1 year and Money market fund is one of the best option to generate profit in short time investment and can be good option for those investors who want lowest risks.
Dynamic bond fund – In this option your money is invested in debt instruments with various maturity periods and maturity period is usually based on interest rate regime. Dynamic bond fund can be good investment option for those who can tolerate moderate risk and maturity period varies between 3-5 years.
Corporate bond fund – Corporate bond fund is good option for those investors who want lowest risk and who are willing to invest in high quality corporate bonds.
Which investment plan to go….
After knowing various investment plans of debt market you might be felling confuse which plan to choose, well that is completely upon you…
Investment plans are available based on various factors such as risk tolerance, time frame and interest rate so you can happily choose your plan as per your desire.
If you want to invest your money with lowest risks than it is highly recommend to invest your money in money market fund schemes which can provide you risk free returns or if you want to invest your money for longer period of time such as 7 years than you can to for Medium to long duration fund plans.
Debt market is very wide and dynamic so it has investment plans for almost everyone and person of all age groups.