It’s time to move beyond term deposits with debt mutual funds
Why You Should Consider Investing In Debt Mutual Funds Rather Than Term Deposits
Debt mutual funds are an ideal option for investors looking for security and the potential for higher returns.
- Risk: When you invest in term deposits, you do so on the premise that the investment is risk free. However, this is not the case. There is always a risk of inflation. Interest rates on these instruments are fixed while interest rates, and therefore inflation, in the economy keep changing. There is always the risk that the inflation rate will be higher than the fixed deposit rate. So, despite some returns, the value of silver might not increase at the rate of inflation.
- Taxation: If you are a short-term investor (less than 3 years), then the tax difference will have no impact. However, if you are a long-term investor, especially one in the top 30% tax bracket, investing in debt mutual funds is much more tax-efficient. .
- Investment choice: Debt mutual funds will give you the ability to invest within time frames and risk-return profiles. If you are looking to generate potentially higher returns, you can put your money in debt mutual funds that invest in higher risk companies. On the other hand, if you are looking to invest in low risk instruments, you can invest in funds exposed to government bonds.
So while term deposits have been a favorite investment choice for millions of Indians, it’s time you gave mutual funds a chance. They offer the benefits of fixed deposits and more.
An investor education initiative by Edelweiss Mutual Fund
All mutual fund investors must go through a unique KYC process. The investor should only deal with registered mutual funds (RMFs). For more information on KYC, RMF and the procedure for filing / redressing any complaint, visit – https://www.edelweissmf.com/kyc-norms
Investments in mutual funds are subject to market risks, carefully read all documents relating to the plan.