11 Advantages Of Debt Mutual Funds

1. Debt funds are best option for an investor with low risk appetite. 2. Diversification: On an average a debt fund holds 10+ different paper. So there is no single party risk and diversification. 3. Your investments are not affected by equity market volatility. 4. Debts fund are highly liquid which can be easily converted in to cash that too within a day time. 5. Divisibility: Unlike a bank FD, a debt mutual fund can be broken into units of Rs 1  e.g. If someone has a 5 lac debt mutual fund and needs to withdraw just Rs 10000 he can do that while in the FD whole 5 lacs need to broken, this provides great flexiblity in managing money. 6. Add stability to your investment portfolio. 7. No deduction of taxes or TDS on the earning from debt funds. Taxes to be paid only when an investor sell or withdraw fund units and depending on period of the investment.

9 Difference Between Debt And Hybrid Funds

1. In Debt funds, the money pooled from people are invested in fixed income instruments like government bonds, corporate bonds, non-convertible debentures and other highly-rated instruments.  2. Hybrid mutual funds: Invest the money gather into both debt and equity. These are diversified mutual funds having perfect balance between risk and returns on investment. 3. Risk: Debt Fund: Low Balanced Fund : Medium 4. Those who are more aggressive can avoid a pure debt fund and instead go for balanced and equity funds, while highly conservative investors can pick balanced and debt funds. 5. A debt fund provides a steady but low income relative to equity. 6. Hybrid Funds: There are schemes that invest in two assets, for instance, equity and debt, or debt and gold. 7. Returns: Debt Fund: Low (4-10% p.a.) Balanced Fund: Medium (10-15% p.a) 8. Investing in hybrid funds can help avoid the hassles of investing separately in both debt and equity. 9. Suggested Investment horizon: Debt Fund: Flexible Hybrid Fund: Medium-Long (1-2 years)