Question: Is Debt Fund Better Than Fixed Deposit?

Which is better debt fund or fixed deposit?

The big difference is that debt funds offer a lot of flexibility and choice.

Bank FDs are now giving just about 7-7.5% interest on their FDs.

On the other hand debt funds will also benefit from falling interest rates as debt funds experience NAV appreciation when rates fall.

This benefit is passed on to investors..

Which debt fund is best?

Top 10 Debt Mutual FundsFund NameCategory1Y ReturnsSBI Magnum Medium Duration FundDebt13.2%IDFC Government Securities Fund Investment PlanDebt14.5%Franklin India Savings FundDebt6.7%ICICI Prudential Credit Risk FundDebt11.0%12 more rows

How do I choose a debt fund?

Parameters to Pick the Best Debt FundAverage Maturity/Duration. … Interest Rate Scenario. … Current Yield or Portfolio Yield. … Credit Quality of Portfolio. … Assets Under Management (AUM) … Expense Ratio.

Is debt mutual fund risk free?

Things to keep in mind when investing in a debt fund now You should keep a tab on risks like credit risk, liquidity risk, interest rate risk, and duration risk when investing in a debt fund. … One thing is now clear to most investors — debt funds are not risk-free.

Is it right time to invest in liquid funds?

The interest rate of liquid mutual funds is the lowest among all short-term investments due to low maturity period. No entry and exit loads are applicable. Liquid funds are a perfect solution for investors who wish to park their idle cash for a short duration without the risk of Capital Loss.

What is the best alternative to fixed deposits?

Alternatives to Fixed DepositsDebt Mutual Funds. Debt mutual funds invest in comparatively secured investment options such as corporate bonds, government securities and money market instruments. … Liquid Funds. … Equity Funds. … Corporate Fixed Deposits. … Fixed Maturity Plans. … Government Bonds.

Is it a good time to invest in gilt funds?

For an investor, gilt funds can be an ideal blend of low risk and reasonable returns. However, the performances are highly dependent on the movement of interest rates. So, a falling interest rate regime would be the best time to invest in gilt funds.

Do debt funds have lock in period?

Debt funds do not have a lock-in period. You have the option to withdraw your money at any time.

Which mutual fund is best for 5 years?

Other Mutual Funds for 2020Fund NameCategory5 YearAxis Long Term Equity FundELSS (Tax Saver)7.11%ICICI Prudential Bluechip Fund-GrowthLarge Cap3.97%SBI Magnum MultiCap Fund-GrowthMulticap5.63%ICICI Prudential Equity & Debt Fund -GrowthAggressive Hybrid6.14%11 more rows

When should I invest in debt fund?

The simple thumb rule for investing in debt is: when the interest rates are around or below 6%, it is better to invest in debt funds like liquid funds or ultra-short duration funds or low duration funds. Or it could be even short-term fixed deposits with banks. … The interest rate risk always exists in debt investment.

Is it good to invest in debt funds?

The simple thumb rule for investing in debt is: when the interest rates are around or below 6%, it is better to invest in debt funds like liquid funds or ultra-short duration funds or low duration funds. Or it could be even short-term fixed deposits with banks.

Is there any risk in debt funds?

Investing in debt funds carries various types of risk. These risks include Credit risk, Interest rate risk, Inflation risk, reinvestment risk etc.

Why you should not invest in fixed deposit?

Inflation risk: FD returns at times can be around the same as inflation or even lower than inflation rates leading to wealth erosion for the investor. 4. Interest rate risk: Bank FDs carry the risk of being locked in for a long tenure at low rate of return.

How do debt funds make money?

How do debt funds work? Debt funds aim to generate returns for investors by investing their money in avenues like bonds and other fixed-income securities. This means that these funds buy the bonds and earn interest income on the money. The yields that mutual fund investors receive is based on this.

How safe is debt mutual fund?

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 worst performing fund lost over 11 per cent during this period.

Which bank is best for FD 2020?

Fixed Deposit Interest Rates 2020BanksFD Interest RatesTenureHDFC3.00% – 6.25%7 days to 10 yearsPNB Housing Finance7.20% – 8.00%12 months to 120 monthsICICI Bank3.25% – 6.25%7 days to 10 yearsAxis Bank3.50% – 6.75%7 days to 10 years3 more rows

Are fixed deposits worth it?

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.

Which fund to buy now?

Here is the list of top 10 schemes:ICICI Prudential Equity & Debt Fund.Mirae Asset Hybrid Equity Fund.Axis Bluechip Fund.ICICI Prudential Bluechip Fund.L&T Midcap Fund.DSP Midcap Fund.L&T Emerging Businesses Fund.HDFC Small Cap Fund.More items…•