Skip to main content

Debt Mutual Funds with SIPs

Invest In Tax Saving Mutual Funds Online

Call 0 94 8300 8300 (India)

 

 

Fixed- income investors are not used to surprises, but the bond market this past year has been full of them (nasty ones). In the last few months, the 10- year GSec has been gyrating sharply and has crossed the 9- per centyield mark four times. Fund managers often get caught on the wrong foot when yields shoot up, as it hits bond NAVs. Returns from bond funds in the past six months have been choppy.

So it is little surprise, that the disparity between the best and worst performers has also widened, even within the same category of funds, say, longterm bond funds. In the last six months, the best performer has returned 4.38 per cent, whereas the worst performer has returned - 9.67 per cent, a 500basis- point difference. Before this volatility began, at best the difference was around 100 basis points.

For fixed- income investors receiving such a hard knock of over 500 basis points is not quite the way to go. If the interest rate in the economy remains stable or heads lower, bond investors can make great money. But the last few months volatility in the bond market has proved that interest rates are anything but stable right now. The 10- year G- Sec yield has surged past the nine percent afew times in the month of November. Such rates were last seen five years ago.

For bond investors, the opposite scenario is much preferred.

Lower bond yields and rising bond prices make great returns for investors. Bond yields have been inching higher now and fund managers, but its not clear how much higher yields will go – particularly with growth slackening. The Reserve Bank of India may consider raising interest rates, but the beast of inflation still dogs the economy. If it does indeed rachet up the rates, the bond market will again see itself in choppy waters.

At such times, Systematic Investment Plans (SIPs) can race to the rescue. They allow for the spreading out at regular intervals of available investment amounts and, hence, averaging out the cost of investments.

This is chiefly used in equity investments; hence, when most investors think of a SIP they associate it with equity.

Though utilising SIPs is undoubtedly suitable for equity investment, that does not mean that investors should not look at other investments where the same strategy could yield better results.

Debt investments

When investing in debt mutual funds, a SIP can be effective in ensuring that the investment takes place in line with requirements.

This means that similar to equity mutual funds, even for debt funds utilising a SIP (staggering investments in order to average out costs) would be beneficial. It would help to compare how debt mutual funds stack up against comparable choices available.

Debt investments are those that yield a fixed rate of return. Such instruments, though, are often traded in the market; hence, an added element enters into the picture.

The range of mutual funds available in the debt field is extremely large — from liquid funds ( very short term) to income and gilt funds ( for a longer- term outlook). There are also fixed- maturity plans, closed- end schemes comparable with Fixed Deposits (FDs).

An investor can choose those found suitable, thus, ensuring that the investment matches the risk- taking ability as well as the manner in which s/ he wishes investment exposure.

Regular flow

Most people who wish to invest in different instruments, including debt mutual funds, do not have the luxury of large investment amounts available at a single point of time. They build up capital over time through regular investments and, hence, there is an element of a flow in their funds which needs to be invested in a proper manner. SIP in a debt fund would be the best way to go about this as it would ensure that a fixed sum is invested each month matching the cash flow to an individual in the form of income.

Tackling tough times

Also, the debt market is not similar across all time periods. There are periods of is a rising interest- rate scenario, pushing down overall returns for openend long- term debt funds. ( A portfolio loses value because of the fall in prices of debt instruments.) The reverse also holds true. Hence, an individual has to ensure that s/ he is invested throughout a cycle so that the benefits of an investment are actually received. This can be done through a SIP, which would ensure that the investment is made for a longer period covering both good and bad periods, thereby evening out the entire situation. A SIP is supposed to do this.

Flexibility

A SIP enables an investor to ensure a specific sum of money at a particular time in future. This is important from the point- of- view of an investor, as then s/ he can get the money when s/ he wants. Also, s/ he can change the investment to tune in to her/ his goals and to the amounts required once a SIP ends and another begins so that the amounts for investing are available. This flexibility is good for an investor as s/ he is able to make the most of the choices before them in order to meet her/ his goals.

Alternatives

Alternatives such as a recurring deposit, which investors consider for regular investment, have a specific time period, reducing flexibility compared to debt funds. Also, only a single type of exposure is available with a recurring deposit while this is multiplied with debt funds and a SIP as the choice here is wide in terms of the nature of instrument. Another point is that, once the amount of the recurring deposit is fixed, it does not provide much flexibility in terms of change depending upon varying conditions arising. The amount of an investment in a debt fund can be altered once an initial SIP is completed and another starts. FDs are not suitable for regular investments as they would increase the administrative work involved in managing multiple deposits.

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. ICICI Prudential Tax Plan Invest Online
  2. HDFC TaxSaver Invest Online
  3. DSP BlackRock Tax Saver Fund Invest Online
  4. Reliance Tax Saver (ELSS) Fund Invest Online
  5. Birla Sun Life Tax Relief '96 Invest Online
  6. IDFC Tax Advantage (ELSS) Fund Invest Online
  7. SBI Magnum Tax Gain Scheme 1993 Invest Online
  8. Sundaram Tax Saver Invest Online
  9. Edelweiss ELSS Invest Online

------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver MutualFunds Invest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

Popular posts from this blog

Save Tax With Mutual Funds

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300       Mutual funds are ideal as long term investment avenues for retail investors. To encourage investments in this avenue, the Government of India offers investors a spate of tax benefits thus ensuring maximum benefit from mutual funds held beyond a year. Sample some of the key benefits and refer to the table for a detailed list of tax rates for different types of schemes ·        Avail deductions under Sec 80C of the Income Tax Act by investing up to a maximum of Rs. 1 lakh in designated Equity Linked Savings Schemes (ELSS). Such investments have a compulsory lock in period of 3 years. ·        First time retail investors in equity with a gross total income of up to Rs. 12 lakh can invest up to Rs. 50,000 in specific MF schemes un...
Read more

How much to invest in gold ?

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India) Let your motivation dictate the share of the yellow metal in your portfolio Enough has been said and written about gold as an investment option. The latest argument is that the craze for gold among Indian households is endangering our country's balance of payments. The policymakers are busy trying to find ways of discouraging investment in gold, but if households keep the common good in mind, they would be paying the market price for gas cylinders as they do for, say, their mobile phone bills. After all, private decisions are driven by private motives. So, how should a household look at gold from its own perspective? Gold is primarily acquired for its merit as a store of value. Even if the worst crisis hits a family, the gold that it holds could be put to use anywhere in th...
Read more

Buying a Used Car

Invest in Mutual Funds Online Download Mutual Fund Application Forms   Pre-owned car can make sense in these inflationary times. But buying one can be trickier than getting a new vehicle    If you are thinking of buying a car but are worried about the rising inflation and higher EMIs eating into your budget, you should consider buying a used car. For those learning to drive, the general advice is that they should hone their driving skills in a used car. However, buying a used car is not an easy task. Though a used car costs less, there are a lot of aspects to be considered while buying one. You should do your due diligence before buying such a car. For example, two cars of the same model would carry two different prices. The difference in price could be on account of the age of the car, how many people have driven, etc. First Fix Your Budget Since used cars are available in a wide variety of models and prices, the starting point would be to determine your budget befor...
Read more

Debt Mutual Funds Best Fixed Income Investments

Debt Mutual Funds - Invest Online     In the last one year, except for a select few sectoral funds and small cap funds, not many of the equity funds have given great returns. On the other hand, debt funds have done relatively well in terms of returns. So far in the new year too, the stock market has been extremely volatile, pushing investors to look for safer havens. In this context, debt funds are looking safer bets for those investors who do not have the appetite for higher level of volatility. Investors who look for a regular income stream, also look at fixed income products like debt funds, bank fixed deposits and post office monthly income schemes.  Among the fixed income products, debt funds score over others because of chances of higher return, has nearly similar level of risks and liquidity. According to Shah, people looking for regular income could opt for a systematic withdrawal plan (SWP) in debt funds , which, if done judi ciously could also save on taxes. Shah explaine...
Read more

Diversification is key to gain more

Even those who prefer debt for its safety are looking at more options    It is not often that you find more than a couple of asset classes producing good returns at the same time. Invariably, assets such as gold and equity don't perform in tandem, and hence it was easier to allocate to them in line with the risk profile of the investors. In the last couple of quarters, however, more than one asset has turned attractive - gold, debt and equity. In line with the trend, you even have monthly income plans with a combination of more than two assets.    In the past, those who stuck to debt were a different class of investors who didn't wish to take risk with their money. The changing lifecycles and the growing integration of investment markets across the globe have pushed even individual investors to embrace the concept of asset allocation. Hence, you have individuals who were using debt to park profits being prepared to take advantage of other assets.    For instance, when the...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now