Maximise Returns And Earn Huge Profits By Investing In Best Debt Funds

Author: Raghav Mehera

Corporate FDs and investment avenues offered by the leading banks bring in a lot of opportunities for individuals. If you wish to invest in the right place that ensures profitable returns, debt funds can emerge as the perfect choices. Putting your hard-earned money in best debt funds can increase the possibilities of earning huge returns. If you wish to explore a different funding avenue and strive to maximise returns, acquiring detailed information about this investment area would be imperative.

Delving deep into classifications

You have to develop profound ideas of the classification and divisions of these funds. Debt funds can be beneficial for your investment portfolio as well as advantageous for effective returns. However, you have to know the right place to put your money and distribute finances judiciously. Here’s a detailed report on the matter:

Range of options

If you wish to make mutual fund investments, you will surely come across diverse type of debt funds that come with different lifecycles. The investment portfolio, composition and objectives of these funds are quite different from each other. Depending on their composition and lifecycle, debt funds can be divided into the following classifications:

  • Ultra short-term funds
  • FMPs or ‘fixed maturity plans’
  • Gilt funds
  • Income funds
  • Hybrid investment avenues

Why opt for them?

When it comes to choosing an investment channel, investors have quite a few things going on in their minds. The flexibility of investment along with rate of returns happen to be two crucial factors. You have to understand the operations of these funds and how they prove to be effective for you. It’s here that unraveling the advantages and understanding them becomes crucial:

a. Increased liquidity: Debt funds are mostly open-ended by nature, which make exits and entries quite smooth for investors. You can enter the deal any day and exit the fund according to your wish. Compared to corporate FDs and bank investments, these funds surely offer increased liquidity.

b. Diverse portfolio: Maturity, asset class and credit quality are three of the most crucial factors involved in mutual fund portfolios. If you are planning to put your money in debt funds, you will surely have a host of investment options. Check out the following avenues for a detailed picture:

i. CPs

ii. CDs

iii. T-Bills

iv. Corporate bonds

v. Government bonds

Depending on your investment requirements, you can channelise your finances in any of these areas. Investors also have the chance to invest in corporate FDs as well as NCDs.

c. Enhanced tax efficiency: Banks don’t offer flexible rates and that’s the reason for increased tax liability. Debt funds ensure low tax deductions and reduced liabilities. In case of debt funds, long-term gains can be taxed at 20% with indexation and 10% without that.

Signing off

By now, the benefits of choosing and investing in debt funds must have been quite clear. If you wish to look for best debt funds and make sure they ensure positive returns, finding the most reliable investment partners would be the first thing to do. You have to develop associations with reputed companies capable of extending complete support in this regard.