Disclaimer: The ideas and thoughts expressed in this article are not any kind of investment advice intended to influence anybody to take investment decisions. Please note that the numbers shown in the article are not accurate and not applicable for all income groups and would vary as per the changes in income tax rules from time to time. Please consult your advisor before taking any investment decision.
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.
Note: Starting 1st April 2023, the debt funds no longer receive indexation benefit and deemed to be short-term capital gain. Therefore, the gains from debt funds will now be added to your taxable income and taxed at the slab rate.
To know more about Debt Funds and to invest in Debt funds, Connect with us https://www.assetplus.in/mfd/investonline
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