In India, there is a myriad of investing options for an investor. Be it a gold investment or equity, investors today are trying their hands at everything available. However, one option that has been consistently beneficial from a long time is a debt fund. Here are five reasons why investing in these funds is the safest option.
Over the past few years, investors have got more benefits from investing in debt fund than they would have got from any other option. Moreover, even the pundits of the market recommend Debt Mutual Funds to all those investors who don’t carry a risk-appetite.
Whether you have just started with your investment journey or are already an ace investor, investing in these funds will surely offer you long-term security. How? Read ahead and know more about it.
- Different Choices:
Mutual funds provide a handful option of Debt Mutual Funds that come with various investment goals, tenures, and portfolio composition. Based on the portfolio composition and tenure, these funds are classified into two options: short-term and long-term. Hence, you have a lot of choices in front of you for risk-free investments.
- No Load On Exit:
While in FDs, you might have to pay penalties or exit fees while closing the deposit; however, with debt fund, the scenario is completely reverse. Here, there is no concept of exit load or penalty. Moreover, even if you are investing some of the short- term Debt Funds for a week, nothing hampers your interest rate, which isn’t possible in fixed deposits.
- Invest as Per Your Choice:
If you are unaware of your future and want to park your surplus cash without anticipating the time-period, these funds are the ideal choice for you. They not only offer better returns as compared to Fixed Deposits but don’t even bother you to specify the time-period. Hence, you can invest in them and can withdraw as per your convenience.
- Lower Tax:
Another reason why these funds are a safe option is that of their lower tax deduction in the longer-run. In these funds, your long-term gains will be considered as capital gains and will be taxed accordingly. For instance: For the first three years, the tax deducted would be at your income tax level. And, after three years, tax deductible will be 20% and that too, only for the indexation benefits.
- No TDS:
While you invest your money in other investment options, such as FD with the bank, you have to pay TDS (Tax deducted at source) every year, irrespective of the maturity period of your investment. On the other hand, Debt Funds do not charge you any TDS not even at the time of withdrawal; you just need to pay the tax.
These are some of the top reasons why you must consider investing in Debt Mutual Funds more than any other investment option. They are not only safe and secure but also offer various benefits.