5 Benefits of investing in Debt Mutual Funds

Published : 24 Apr 2023

Unlike other financial products debt funds allow investors to withdraw small amount so dividend income on a regular basis

1. Regular income:

Debt funds are less tax-efficient than equity funds but more efficient than bank deposits. Bank deposits offer very little interest rates and are taxed every year while debt funds offer higher returns and just like equity funds, debt funds are only taxed when the units are sold.

2. Tax Efficiency

Debt funds offer higher interest rate return than normal bank deposits. Hence, investors can earn a better interest income from investing in these funds for a short period of time

3.  Good option as a short-term investment or emergency fund

Debt funds are easily redeemable just like equity funds. Unlike other fixed income instruments (like FDs or PPFs), these funds do not come with any lock—in period and have high liquidity.

4. Liquidity

Debt funds invest majority of the principal amount in financial instruments such as certificates of deposits, debentures, bond papers, t-bills, etc. Thus, instruments do not fluctuate as easily as stocks and are not dependent on market sentiments to generate returns.

5.  Stable returns

Check 5 Debt Mutual Funds details here: 

AUM: 2,42,183 Cr | NAV: ₹14.9 | Minimum SIP amount: ₹1,000 |  3 Years Returns: 6.8%

AUM: 24,507 Cr | NAV: ₹20.1 | Minimum SIP amount: ₹500 |  3 Years Returns: 10.3%

AUM: 4,84,872 Cr | NAV: ₹32.8 | Minimum SIP amount: ₹100 |  3 Years Returns: 7.3%

AUM: 3,393 Cr | NAV: ₹24.2 | Minimum SIP amount: ₹1,000 |  3 Years Returns: 8.6%

AUM: 4,18,852 Cr | NAV: ₹21.5 | Minimum SIP amount: ₹100 |  3 Years Returns: 7.4%