As mentioned earlier, mutual money is of more than one type and serve different investment objectives. They are available in several kinds, one of them can be described as ‘debt fund’. It is the antithesis of the equity fund. As their names suggest, debt funds put money into debt securities whereas equity funds put money into equity securities, for example private equity or more commonly in stocks of public companies. These investments are, of course, risky. On the other hand, it put money into debt securities for example fixed deposits, government bonds, private deposits etc. They are low-risk and so are intended to provide returns inside the short-term within the form of a consistent income. The rubric of debt funds can even be categorised into various kinds determined by their nature. For example, liquid funds (also known as money market funds) put money into highly liquid money market instruments for very short intervals, sometimes at as few as one day.
GILT are debt funds that invest only in those financial securities that are endorsed, or sanctioned, from the government. They are practically risk-free, if you do not take into account fluctuating interest rates. Even then, GILT are an exceptionally stable means of investing your cash. Other types of debt funds include MIPs, or monthly income plans, which invest in an appropriate mixture of debt and equity securities to make sure that the investor receives a consistent monthly income. Yet more varieties of it, include floating rate funds, dynamic bond, ultra temporary, medium term income funds amongst others.
Each kind of debt fund suits a different set of consumer demands. The best mutual funds to have an investor are those that go over as numerous of his requirements and investment objectives as is possible. Even though these are generally a safe and secure means of investment, they still need the investor to become wary of where he puts his money. If you happen to be a very ambitious investor, debt money is not to suit
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