With equity investing catching the fancy of investors in recent years, especially after the Covid-19 pandemic, debt funds have often remained on the sidelines. This is the market to cash in on the bull run, as if it's a magical get-rich-quick formula.
It is also a fact that fewer retail investors really think about investing in debt funds. These usually include the ones who understand the importance of asset allocation in a portfolio, those who are saving for a short-term goal and retirees looking for a relatively safer instrument to park their corpus (see Why Should You Invest In Debt Funds?).
These investors saw their patience tested for the last few years as interest rates bottomed during Covid-19 as governments and central banks, including India's, tried to fight the pandemic and its aftermath by lowering rates. Usually, when rates are lowered, debt funds do well, but since foreign portfolio investors (FPIs) became net sellers, they suffered. From May 2022, the Reserve Bank of India (RBI) reversed its stance and as rates started going up, returns from debt funds took a hit as is usually the case. Now, with RBI keeping rates stagnant for about a year and expectations of a rate cut later in the year, the tides may turn for debt funds.
Does that mean it's the right time to buy debt funds? We try to answer that question by putting the Indian debt market in context for the last three-four years to enable you to make the right decision, and some others that are crucial for debt fund investing.
The Post-Covid Story
Debt fund investors got a rude shock when the interest rate bottomed out in 2020 but they didn't gain due to other factors. That year, when the pandemic struck India, RBI lowered the rate by 75 basis points (bps) in February and an additional 40 bps in May. This rate cut brought the interest rate to an all-time low of 4 per cent, remaining stagnant for around two years.
هذه القصة مأخوذة من طبعة April 2024 من Outlook Money.
ابدأ النسخة التجريبية المجانية من Magzter GOLD لمدة 7 أيام للوصول إلى آلاف القصص المتميزة المنسقة وأكثر من 9,000 مجلة وصحيفة.
بالفعل مشترك ? تسجيل الدخول
هذه القصة مأخوذة من طبعة April 2024 من Outlook Money.
ابدأ النسخة التجريبية المجانية من Magzter GOLD لمدة 7 أيام للوصول إلى آلاف القصص المتميزة المنسقة وأكثر من 9,000 مجلة وصحيفة.
بالفعل مشترك? تسجيل الدخول
Tax Reforms: What's In Store?
The government is working on reforming the existing Income-tax Act, 1961. The impending reforms have raised many questions in the minds of taxpayers. Will the old regime and deductions be done away with? Will it really simplify your life? What's the need for these reforms? We try to answer these and other questions regarding tax reforms
5 Questions That Will Lead You To The Right Financial Planner
Choosing a financial planner is not as easy as it may seem. Besides the right credentials, you should also consider things like the kind of services you will be needing-tax advisory, estate planning-as well as the fee structure. Here are five questions that will help you choose the right planner
Health Insurance Sub-Limits
Sub-limits in health insurance are restrictions placed by the insurance company on the SP maximum amount they will pay for specific expenses that are part of the total hospital bill.
Delayed Gratification, Humility, Understanding Inflation And Risks Key To Financial Success
The journey to financial success is continuous, requiring patience, education, and disciplined decision-making.
Avoiding Common Pitfalls through Asset Allocation and Multi-Asset Investing
Just as you track the calories and nutrients for a well-balanced diet, you need a balanced portfolio that has multiple assets to balance the risks and returns.
Mutual Funds for Financial Growth
Mutual funds allow you to invest in small amounts and seize the compounding growth, and experts help tackle volatility and asset allocation, making them a potent tool to create wealth.
Multi-Asset Investing is The Financial Equivalent of A Well-Balanced Diet
Just as you track the calories and nutrients for a well-balanced diet, you need a balanced portfolio that has multiple assets to balance the risks and returns.
Theme and Triumph: How Thematic Funds Can Boost Your Bottom Line
Thematic funds target high-growth opportunities in various industries and economic sectors, allowing investors to participate in future-focused segments to generate long-term returns.
Wealth Creation Through SIP - The Slow & Steady Road to Success
For investors seeking to create long-term wealth, SIPS are a powerful tool that enables regular, disciplined investments to generate compounding returns.
Tuition Fee Varies Among Countries
I am 22 years old and have recently started working in a software company.