Short-term Debt Funds- The best bet in the current market

Most people tend to seek the assistance of
savings bank account or fixed deposits to put the excess cash at their hand
which they would require in a few days or weeks of time. But while doing so,
they’re missing the opportunity to earn better returns. In
order to earn better, put your money in short-term debt funds as they offer the
investors with higher rate of returns compared to fixed deposits of banks and
also tend to provide a low average maturity period. Typically, short-term debt
funds are debt-oriented funds with low risks that come with an investment
horizon of 2 years or less. When compared to bank FDs, Short-term debt funds
are better in terms of liquidity, taxation and returns.

why Short-term debt funds are the best option at this time

In this chaotic market, the equity-oriented
funds are too risky and fruitful only for the long-term. To satiate your
financial needs for the short-term, it is better to utilise the perks of
short-term debt fund options.

These 3 reasons show why Short-term debt funds
are the best option at this time

  1. Facilitating
    rational returns:
    as a safer option of investment than equity funds, the short-term debt funds
    offer a fixed maturity date and a fixed rate of return, which make it somewhat
    immune to abrupt market changes. An investor can enjoy a varying tax effect on
    their investment in funds like Liquid Funds, Floating Rate Funds, Ultra Short
    Term Funds and Corporate Bond Funds. Investors can earn rational returns on
    their chosen time horizon and choice of a debt fund.
  2. Maintaining
    a healthy portfolio:
    allocation is the key to maintain a healthy investment portfolio; having
    short-term funds in one’s portfolio helps facilitate the same. Each investment carries
    a significant share of risks; the risk of capital erosion prevails with equity
    investments made for the short-term. To meet short-term financial goals, it is
    better to invest in short-term debt funds to minimise the risk of principal
    erosion and to earn better returns through regular portfolio management and
  3. Fulfilment
    of financial goals:

    This fund is the most suited for short-term financial goals as it helps the
    investors to achieve their goal in a hassle-free manner. Moreover, it also
    tends to offer higher post-tax earnings when compared to the rest of the non-equity
    alternatives for the same period. It is also deemed better than FDs in terms of
    tax. The tax on gain earned through short-term funds is calculated on the
    investment period, while the interest earned on FD is taxed as per the income
    slab of the depositor. These features of short-term funds help investors to
    reach their short-term financial goals faster and with much ease.

the best debt fund for yourself on the basis of your financial standing and
requirement and not on the basis of the popular trends. Seek the help of our
team of professional financial advisor to study the market factors and to
review your portfolio accordingly.

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Mutual Fund investments are subject to market risks, read all scheme related documents carefully. Past performance is not an indicator of future returns. Wealth Redefine is a AMFI registered Mutual Fund distributor – ARN - 167127

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