Debt Fund Investment will definitely affect the financial planning of the common man
Recently, Reserve bank of India has announced to hike repo rate by 25 basis points to 6.25 per cent and reverse repo rate to 6 per cent so interest rate on EMI’S and home loan, car loan has become costlier than before so it will definitely affect the financial planning of the common man. Instead of this fixed increase in the policy rate, there could have been a positive impact on fixed deposit. According to financial experts, a home loan will raise them as the marginal cost of lending rates will increase for banks for upcoming years. If there is no security in a capital market than it will create big confusion amongst the investor for investing and financial planning. So usually borrowers avoid debt fund investing because it gives lesser returns as compared to equities. Nevertheless, Debt fund Investment is our main instrument for investment and one must have knowledge before investing in debt fund. According to experts, there are few main points why an investor should invest in this fund.
Debt fund offers diversification option to an investor. So one’s portfolio can be diversified easily to invest in international funds because this fund provides lesser returns that are more stable than equity fund, using debt fund option you can reduce the overall portfolio risk by diversifying it. If you are planning to invest in international markets for accomplishing your financial goals than this fund will allow you to take benefit from international stories.
Debt fund is highly considered for its high liquidity and investor’s money is a very reserve in these funds because in emergency investor can redeem it so if sometimes you need money in the very short notice so debt fund is the best for that type of situations because it is the ideal place to secure your money.
If you are planning for investment to generate regular income to fulfil your financial dreams than debt fund is the best investment. The best thing about debt fund is that it provides dividend payout option through which one can easily generate regular income by choosing this option and with investment in debt funds one can also generate regular income by other option that is to opt for systematic investment plan which is reverse of SIP.
Investing in debt fund is less risky when you are investing in a product that can give decent inflation-beating returns along with interest benefit. So investing in debt fund is less risky as the latest inflation rate is 4-5 per cent and getting return approx 7-8 per cent. So it is the best way to invest in debt fund to accomplish your financial goals.