These Mutual Funds invest in various debt / fixed income securities
like Central and State government securities, money market securities,
commercial papers corporate bonds and corporate debentures.
Ocean Finvest Smart Tip 1: Debt Mutual funds are best suited for
investors who are risk averse and are looking for more stable and regular
returns for their investments. These investors can benefit immensely from the
Indexation benefit provided by the government on taxation for Long Term capital
gains tax on these funds. Long term Capital Gains tax on Debt funds is 20% with
indexation benefits. This benefit can be availed by staying invested in these
funds for more than 3 years. These funds are, therefore, a much better
investment option than Fixed/Recurring Deposits any day. For example while post
tax returns of a 9% yielding FD would have been 6%, post tax returns from a same
return generating Debt Mutual Fund would have been 8.8%. A whopping 50% more
return than FD. Still investing your money in FDs year after year????? Check out
the 3 or 5 Years Annualized post tax returns of the Debt funds on our website to
validate the same for yourself.
Ocean Finvest Smart Tip 2: Debt Mutual funds can also be a great
investment option for investors who, although, have risk taking ability and
willingness for Equity Mutual funds but think that the current valuations in the
markets are very high and want to invest in equity markets only after a
correction. These investors can park their money in Debt Mutual Funds for the
interim. This would be still a better option than parking money in Fixed
deposits as FDs levy a penalty of 1-2 percent for premature withdrawals.
However, debt mutual funds are very liquid and many debt funds do not impose any
penalty on withdrawal. So the investor can get much better returns than FD from
his Mutual Fund investments.
Ocean Finvest Smart Tip 3: Some Debt mutual funds with high and medium
term to maturity can give fabulous returns to the customers in a falling
interest rate environment. This is because the bond prices move up when interest
rates go down and vice versa.
Explore Top Debt Funds