Money-making tips: Will you gain from debt funds in times of volatile markets? Check point by point listing
Money-making tips: Equity investments have taken a real beating in the last 1-2 months, markets have, however, recovered somewhat recently, but it is a fearful yo-yo ride.
Money-making tips: Equity investments have taken a real beating in the last 1-2 months, markets have, however, recovered somewhat recently, but it is a fearful yo-yo ride. This has made investors pull out their money from equity mutual funds and opt for a risk-free debt mutual funds. The common feeling among investors is that they will return when the market situation improves.
Well, for all investors, here are some money tips they must never lose sight of. Zee Business's advice to many investors has been to remain invested in equity while for some, depending upon their profile, debt funds were recommended.
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How to decide which instrument is good for your profile? To decide this, you need to understand how individual funds work.
Understands what a debt fund is and how it works. What are the financial goals? How many types of debt funds are there? What is the duration risk in debt funds?
Zee Business guest Kirtan Shah, a certified financial planner has some useful tips for you. See the types of funds
-- Overnight fund with a 1-day maturity period
-- Liquid funds have a 91-day maturity period
-- Ultra short term fund with 3-6 month maturity period
-- Low duration fund with 6-12 month maturity period
-- Money market fund with 1 year maturity period
-- Short duration funds with 1-3 year maturity period
-- Medium Duration Fund with 3-4 year maturity fund
-- Medium to long duration fund with 4-7 year maturity period
-- Long duration fund with over 7 year maturity fund
-- Dynamic Bond fund with all duration
-- Corporate Bond Fund 80%- AAA rating period
-- Credit risk fund 65% >AAA rating paper
-- Banking and PSU fund 80%
-- In Guild Fund G-Sec 80%
-- Guild Fund -10 year constant currency
-- Floater Fund 65% in floating rate bond
Check credit ratings of Debt funds to decide the funds
Money market long rating scale
A2 BBB (+/-)
A3+ BB (+/-)
A4+ C (+/-)
What to pick, why and for how long:
For general investors debt fund is right.
Scheme duration credit risk
Money market fund >1 month at least
Liquid fund 2-6 months at least
Ultra short fund 6-12 month at least
Low duration funds 1-3 years at least
Short term fund 3-5 years at least
Banking & PSU fund 3-5 years at least
Corporate Bond Fund 3-5 years at least
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