Due to high liquidity, ease of use and higher returns, Debt (e.g Ultra Short Term Debt) mutual funds are probably the best alternative to Fixed Deposit investments. It's also very easy to manage taxes with liquid or debt funds and if you're in higher tax brackets, you could save some in taxes with debt funds.
Best Mutual Funds in India for 2020
- Mirae Asset Large Cap Fund. Small Cap Funds. 1.85% 5.77% Invest.
- Axis Bluechip Fund. Mid Cap Funds. 7.27% 7.53% Invest.
- ICICI Prudential Bluechip Fund. Mid Cap Funds. -0.93% 3.97% Invest.
- SBI Bluechip Fund. MultiCap Funds. -2.4% 3.18% Invest.
- SBI Magnum Multicap Fund. Balanced Funds. -2.88% 4.02%
Rule: Investments in debt funds are safe because they do not have exposure to volatile assets such as equity shares. Exception: When interest rates are rising, long-term debt funds can give negative returns.
"Those with an investment horizon of two-three years should invest in long-duration gilt funds to gain from capital gains once interest rates ease off," says Ranu. Long maturity bonds are more prone to interest rate risk and hence have higher yields.
- Parameters to Pick the Best Debt Fund. Average Maturity/Duration. Interest Rate Scenario. Current Yield or Portfolio Yield. Credit Quality of Portfolio. Assets Under Management (AUM)
- Best Debt Funds to Invest in 2020.
These funds are good for investors with lower risk tolerance and seeking to invest in high-quality corporate bonds. Banking and PSU Fund – which invests at least 80& of its total assets in debt securities of PSUs (public sector undertakings) and banks.
Rule: Investments in debt funds are safe because they do not have exposure to volatile assets such as equity shares. Exception: When interest rates are rising, long-term debt funds can give negative returns.
List of Best Mutual Fund to Invest for 1 Year
| Fund Name | NAV | 1 YR Return |
|---|
| ICICI Prudential Bluechip Fund Direct Growth | 46.21 | 10.33% |
| ICICI Prudential Equity & Debt Fund Direct Growth | 147.88 | 9.06% |
| Aditya Birla Sun Life Tax Relief 96 Direct Growth | 33.68 | 8.18% |
| L&T India Value Fund Direct Growth | 37.41 | 4.92% |
Fixed Deposits (FDs) are one of the safest and most preferred investment options available to those averse to investing in risk instruments such as equity and mutual funds. FDs allow you to manage your financial risks and help fulfil your goals aspired for different stages of your life.
Following are the key difference between investment through FD and SIP: SIP is better than FD on the basis of tax benefits, flexibility of investment, higher return and diversification advantage. FD suits a conservative investor whereas SIP offers options to conservative and aggressive investors both.
Liquid funds invest in short-term high-credit quality fixed income earning money market instruments.
5. Top 10 Liquid Funds in India.
| Fund name | 3-year returns | Link |
|---|
| UTI Liquid Cash | 6.99% | Invest Now |
| UTI Money Market Fund | 6.97% | Invest Now |
| L&T Liquid Fund | 6.96% | Invest Now |
| ICICI Prudential Liquid Fund | 6.95% | Invest Now |
"Those with an investment horizon of two-three years should invest in long-duration gilt funds to gain from capital gains once interest rates ease off," says Ranu. Long maturity bonds are more prone to interest rate risk and hence have higher yields.
There is no right time as such when it comes to investing in mutual funds. Investments in mutual funds should be made at the earliest. Any day is the best time to invest in mutual funds. Remember, you need to invest as per your financial goals and risk tolerance.
Ashish should realise that debt instruments held in a debt fund are also traded and hence, have a market value. The prices may move up or down in the market. Bond prices react to changes in interest rate. If the RBI reduces interest rates, new bonds and other fixed income instruments carry lower rates.
Rule: Investments in debt funds are safe because they do not have exposure to volatile assets such as equity shares. Exception: When interest rates are rising, long-term debt funds can give negative returns. The funds holding bonds of long maturities suffered losses, with the average fund losing 7.26 per cent.
Debt funds do not have a lock-in period. You have the option to withdraw your money at any time.
5. Top 10 Best Debt Mutual Funds in India
| Fund name | 3-year returns | Link |
|---|
| UTI Gilt Fund | 6.78% | Invest Now |
| Axis Banking & PSU Debt Fund | 8.39% | Invest Now |
| Kotak Dynamic Bond Fund | 7.83% | Invest Now |
| SBI Magnum Gilt Fund | 7.07% | Invest Now |
Debt funds are most suited for investors interested in moderate risk . The risk of investing in debt mutual funds is lower than in equity funds. If you have a lower appetite for risk, these funds can be a right choice for you. You can also invest in debt fund if you have a surplus fund,.
Invest in short-term (six months to one year) income funds which have a portfolio of debt securities offering higher yields at maturity. If interest rates fall from these levels, you can benefit either from capital gains or get high yield at maturity.
