How to choose a Debt-Mutual Fund to match the time horizon of your financial goals?

Debt Mutual Funds are a set of schemes that generate income by investing primarily in fixed income instruments like govt and corporate bonds and other money market securities. These are not linked to the equity market and are considered less risky compared to Equity Mutual Funds.

You can sync debt mutual funds with your goals as below (Based on the concept of Laddering where you match the investment horizon and the maturity period of the product so that there is no market risk on maturity):

  • For 10 Years investment horizon – G-Sec Funds
  • 3 years investment horizon – Short Duration Fund, Corporate bond Funds, Banking & PSU Funds, Credit-Risk Funds (as per risk appetite)
  • 1 Year – Money Market Fund
  • 6 to 12 months – Low Duration Funds
  • 3 to 6 months – Ultra-short Duration Funds
  • Up to 1 month – Liquid Funds

Choose accordingly.

Read: Actions that might harm your money goals and plans

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