Yesterday I was chatting with an old but precious friend of mine. Her husband is looking to buy a new car in the next 4 years. Hence, they want to increase and grow their savings. She said her husband was finding the best investment option for him, and now he selected FDs and Equity Funds. Last night she asked me, which is the best out of them both? I said the third one is a more handsome investment option. And which is the third, she asked Jyoti? My answer was, Debt Funds Mutual Fund.
Yes, the best investment option for nearby 3 years is Debt mutual funds. Now a lot of questions arise- Best Debt funds for 3 years? Best debt mutual funds in India? Best debt mutual fund to Invest in? Which debt mutual fund is best for me? and many more……
Well, let’s discuss some of the best debt mutual funds for 3 years-
Why not FDs and Equities instead of Debt Funds?
If a sudden market decline comes up, then the financial goals you want to achieve by investing in Equity funds will be dreamy. As you are going to invest for nearly 3 years, you will not have enough time to recover your money losses. So investing in Equity Funds for the medium-term is a big no-no.
The second one, the FDs are just hungry investment options that eat your money day-by-day and make them less valuable, as their so-called good returns can not even beat the inflation rates. So, FDs? anha!
Now, this is time to check whether investing in Debt Fund Mutual funds for three years is good or bad. Of Course, a debt fund is a good option for medium-term investments. Gives good return up to 10% in some portfolio. Ha! these can be a little risky than FDs but are very less risky than Equities. Debt funds are invested in corporate bonds, so there’s some risk related to the rate. But again I will say this is best, the risk has a very-very low probability. And these days we have a super hit tale…
‘Risk Hai To Ishq Hai’
Just Kidding.
PSU and Banking Funds
These PSU funds and banks lend money to good-quality honest and respected borrowers. So the risk is low. And everyone is not Vijay Mallya, you know.
Hn! but the interest rate movement in the economy can affect these PSU funds and bankings. AS per SEBI, There are no legal rules or regulations about the duration. The duration can be different for different schemes or also it can be according to your fund manager. This depends on his/her decision. So, plz check compare and be aware of the risk of interest rate.
Best PSU and Banking Funds
Corporate bond fund-
This is a kind of debt fund. These Debt fund mutual funds invest 80% of your money in high-rated, strong, and reputed corporate debt. High-rated corporations, which are more able to pay all of their debts.
So be assured about your capital risk while investing in these funds.
As I said above these can be affected by the economical change in interest rates. Or the fund manager can invest your credit for a long duration, and this can increase the risk. So, try to invest in medium-duration debt funds.
Best corporate bond funds
Short Term Duration Fund
These funds lend money for 1–3 years of duration to the government-backed companies. only good quality companies with paying loans on-time record. So, here risk decreases a lot, either because of the quality of companies or short duration. Hn! But every fund has their own credit risks as they invest in different companies, so this is on you to select the good one fund for your money.
Best Short Duration Funds
Key Point- To invest for the medium term, PSU and Banking funds, Corporate Bond Funds, and Short-Term duration funds are the best debt mutual funds to invest in.
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