Reap more Benefits by Investing in Debt Funds
Category: Blogs
19 June 2013
Reap more Benefits by Investing in Debt Funds
    

Debt fund is an investment pool just like a mutual fund, in which core holdings are fixed income investments. It is likely that it may invest in short-term or long-term bonds, securitized products, money market instruments or floating rate debt. The main investment objective of this fund is usually preservation of capital and generation of income.

There are different debt investment instruments available in the market and investors should invest only in those funds that match their investment horizon and risk profile. Earlier, there was a misconception that only Equity funds require in-depth study before investing. However, the existing micro and macro-economic conditions mandate the same for debt funds as well.

At present, there are a number of investment instruments of debt in the industry and there is a dire need to consolidate a good number of them to make it easier for investors to understand. Their selection can normally be done under four major categories – short-term bond funds, long-term bond funds, monthly income plans and ultra-short term funds.

Although, investing in these funds offer good rewards, very few put in their money in these investment options. One of the advantages of investing in these instruments is that they are liquid. You can withdraw your investments at any time and the money is in your bank account the next day. What is a respite here is unlike a fixed deposit, the fund house does not levy a penalty for exiting too soon.

Another key advantage is that they are considered very good tax efficient instruments. After one year of investment, the income from a debt fund is treated as a long-term capital gain and is taxed at either 10% or at 20% after indexation. Investors get double indexation benefits. This lowers their tax liability. In indexation, the cost of investment is raised to account for inflation for the period the investment is held. The longer you hold a these fund, the bigger is the indexation benefit. There is also no TDS in these funds.

Thirdly, investing in an open-ended debt fund, you do not lose even a days growth. In addition, ploughing your hard-earned money can give you good and higher returns. The pre-tax returns are comparable with those from other debt options such as fixed deposits and bonds. However, if there are changes in interest rates, your investment could give higher returns.

Besides, debt funds are more flexible than fixed deposits (DPs). One can invest small amounts every month through systematic investment plan (SIP) or whenever there is surplus cash. Likewise, one can start a systematic withdrawal plan (SWP) to withdraw a predetermined sum from his/her investment every month. This is very useful for retirees who want a fixed income every month. An investor can also change the amount of the SWP whenever he/she wants.

Many investors who want to stay away from equities have shown keenness in debt products in the form of reallocation or fresh purchase. As a result, these low risk and steady return funds have become highly popular among the investor community. As an intelligent investor, you should use proactive wisdom in choosing the right debt fund that meets your investment horizon and objective.

Disclaimer:

1. Views as are mentioned in the article are personal views of Author and nothing to link with Co., its Director and Employees.

2. All investments are subject to market risk and you need to consult your financial advisor/consultant before investment.

Leave a Reply
ATTENTION INVESTORS:
Precautions for clients dealing in options • || • Investor Charter : Annexure A – Stock Broker | Annexure A – Research Analyst (RA) | Annexure A – DP | Annexure B - DP • || • Advisory for KYC updation • || • Advisory for Investors • || • Investor Awareness regarding the revised guidelines on Margin Collection • || • Link your Aadhar number with us here. • || • IPO Subscription: " UPI Mechanism is Compulsory for Retail Investors. No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account." • || • Prevent Unauthorized Transactions in your Demat Account remains in investor's account." • || • Prevent Unauthorized Transactions in your Demat Account- Update your Mobile Number with your Depository Participant. Receive alerts on your Registered Mobile number for all debit and other important transactions in your demat account directly from CDSL on the same day. “ISSUED IN THE INTEREST OF INVESTORS” "Prevent unauthorised transactions in your account --> Update your mobile numbers/email IDs with your stock brokers. Receive information of your transactions directly from Exchange on your mobile/email at the end of the day . Issued in the interest of Investors."
About the company
Established in 1982 by Mr. Sushil N. Shah as a proprietary concern, SUSHIL FINANCE, over a period of time, has emerged as one of India’s leading Financial Services.... Read More
AppQRcode GooglepayQRcode


"Gain key market insights and stay informed with a real-time Economic Calendar that tracks major global financial events"
Registered Office : Sushil Financial Services Private Limited., 12, Homji Street Fort Mumbai-400 001 • Tel. No. +91-22-40936000Fax No. +91-22-22665758Email: info@sushilfinance.com

KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary. Receive alerts on your Registered Mobile number for all debit and other important transactions in your demat account directly from CDSL on the same day. Prevent unauthorised transactions in your account Update your mobile numbers/email IDs with your stock brokers. Receive information of your transactions directly from Exchange on your mobile/email at the end of the day.

Sushil Financial Services Private Limited - CIN No. U67120MH1991PTC063438- Member : BSE/ NSE. SEBI Registration No. - INZ000165135.. Depository Participant (CDSL) SEBI Registration No.- IN-DP-504-2020. Research Analyst SEBI Registration No.- INH000000867. BSE Enlistment no for RA : 5051. IPO Distributor. AMFI Registered Mutual Fund Distributor ARN No. 77875 Registered Since : 04-Jan-2010 Valid till : 03-Jan-2027

Compliance Officer Details: Name: Mr. Suresh Nemani, Email id: suresh.nemani@sushilfinance.com, Contact No: 022-40935000. In case of any grievances, please write to us on compliance@sushilfinance.com

Disclaimer :
For Research Analyst: Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. Investment in securities market are subject to market risks. Read all the related documents carefully before investing. Mutual fund investments are subject to market risks, read all scheme related documents carefully. Investments in securities market are subject to market risk, read all the related documents carefully before investing.

Protect Yourself from Fraudulent Activities: We want to ensure your safety and keep you informed. While we have not encountered any cases of impersonation involving our brand, it is important to stay vigilant. Fraudsters may misuse Sushil Finance name or Logo to promote fake brokerage schemes, investment opportunities, or other financial services. If you come across any suspicious activities or are unsure about the authenticity of an offer, please do not hesitate to contact us at : 📞 022-40934060 | 022-40934096 📧 social@sushilfinance.com Stay connected with us on our official social media platforms. Your security is our priority. Stay alert and verify any communication you receive to ensure it is from us.

© 2025 Sushil Finance. All rights reserved.