Debt funds are mutual funds that invest in fixed income instruments like bonds and money market instruments. They provide regular income and are less risky than equity funds since they are less volatile. Different types of debt funds invest in instruments of varying maturities - short term, medium term, long term, etc. Factors like average maturity, liquidity, credit quality, fund size, and interest rate sensitivity should be considered while selecting a debt fund. Debt funds are suitable for investors seeking steady returns while avoiding high risk and volatility associated with equity markets.
The presentation covers all the details about types of equity mutual funds. It gives an investor a clear overview on Equity Funds. The presentation covers the the most relevant topics of equity mutual fund that an investor wants to know, like - what are equity mutual funds, classification of equity mutual funds on the basis of market capitalization, investment style, theme and tax. Also explians how to choose the best category of equity mutual funds and best equity mutual funds and how to achieve superior returns from equity funds?
The presentation describes growth of mutual funds sector with an emphasis on indian market. Its history, types, advantages, disadvantages, how to invest, where to invest, etc.
Anything and everything about Mutual Funds.
All About Debt Funds| Debt Funds Explained| Top Debt Funds of India| Debt Fun...Nimish Maheshwari
To Understand this PPT : https://youtu.be/LmWRaDSWLOs
All About Debt Funds| Debt Funds Explained| Top Debt Funds of India| Debt Fund Vs Fixed Deposits | Debt Fund investment Strategy
The presentation covers all the details about types of equity mutual funds. It gives an investor a clear overview on Equity Funds. The presentation covers the the most relevant topics of equity mutual fund that an investor wants to know, like - what are equity mutual funds, classification of equity mutual funds on the basis of market capitalization, investment style, theme and tax. Also explians how to choose the best category of equity mutual funds and best equity mutual funds and how to achieve superior returns from equity funds?
The presentation describes growth of mutual funds sector with an emphasis on indian market. Its history, types, advantages, disadvantages, how to invest, where to invest, etc.
Anything and everything about Mutual Funds.
All About Debt Funds| Debt Funds Explained| Top Debt Funds of India| Debt Fun...Nimish Maheshwari
To Understand this PPT : https://youtu.be/LmWRaDSWLOs
All About Debt Funds| Debt Funds Explained| Top Debt Funds of India| Debt Fund Vs Fixed Deposits | Debt Fund investment Strategy
Dear All,
We hope that our research is proving out to be valuable for everyone. We would like to have your valuable feedback and suggestions so that our effort stays relevant to your needs.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
As part of our Investor education initiative, HDFC MF has sponsored a booklet on 'Plan Your Child's Education' which was printed and published with the current issue (December 30, 2013) of Outlook magazine.
Here's a list of schemes that made it to Mint 50.
The returns are across three time periods and you would do well to first look at five- and 10-year performances and then look at the three-year return to see if the fund is still ahead. Value Research rating gives an indication of the risk-adjusted return.
what is the best method to sell pi coins in 2024DOT TECH
The best way to sell your pi coins safely is trading with an exchange..but since pi is not launched in any exchange, and second option is through a VERIFIED pi merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and pioneers and resell them to Investors looking forward to hold massive amounts before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade pi coins with.
@Pi_vendor_247
The European Unemployment Puzzle: implications from population agingGRAPE
We study the link between the evolving age structure of the working population and unemployment. We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks. Once calibrated to the European economy, we quantify the extent to which demographic changes over the last three decades have contributed to the decline of the unemployment rate. Our findings yield important implications for the future evolution of unemployment given the anticipated further aging of the working population in Europe. We also quantify the implications for optimal monetary policy: lowering inflation volatility becomes less costly in terms of GDP and unemployment volatility, which hints that optimal monetary policy may be more hawkish in an aging society. Finally, our results also propose a partial reversal of the European-US unemployment puzzle due to the fact that the share of young workers is expected to remain robust in the US.
Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
What price will pi network be listed on exchangesDOT TECH
The rate at which pi will be listed is practically unknown. But due to speculations surrounding it the predicted rate is tends to be from 30$ — 50$.
So if you are interested in selling your pi network coins at a high rate tho. Or you can't wait till the mainnet launch in 2026. You can easily trade your pi coins with a merchant.
A merchant is someone who buys pi coins from miners and resell them to Investors looking forward to hold massive quantities till mainnet launch.
I will leave the telegram contact of my personal pi vendor to trade with.
@Pi_vendor_247
how to sell pi coins on Bitmart crypto exchangeDOT TECH
Yes. Pi network coins can be exchanged but not on bitmart exchange. Because pi network is still in the enclosed mainnet. The only way pioneers are able to trade pi coins is by reselling the pi coins to pi verified merchants.
A verified merchant is someone who buys pi network coins and resell it to exchanges looking forward to hold till mainnet launch.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
The secret way to sell pi coins effortlessly.DOT TECH
Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just telegram this number below. I sold about 3000 pi coins to him and he paid me immediately.
Telegram: @Pi_vendor_247
how to sell pi coins in all Africa Countries.DOT TECH
Yes. You can sell your pi network for other cryptocurrencies like Bitcoin, usdt , Ethereum and other currencies And this is done easily with the help from a pi merchant.
What is a pi merchant ?
Since pi is not launched yet in any exchange. The only way you can sell right now is through merchants.
A verified Pi merchant is someone who buys pi network coins from miners and resell them to investors looking forward to hold massive quantities of pi coins before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
what is the future of Pi Network currency.DOT TECH
The future of the Pi cryptocurrency is uncertain, and its success will depend on several factors. Pi is a relatively new cryptocurrency that aims to be user-friendly and accessible to a wide audience. Here are a few key considerations for its future:
Message: @Pi_vendor_247 on telegram if u want to sell PI COINS.
1. Mainnet Launch: As of my last knowledge update in January 2022, Pi was still in the testnet phase. Its success will depend on a successful transition to a mainnet, where actual transactions can take place.
2. User Adoption: Pi's success will be closely tied to user adoption. The more users who join the network and actively participate, the stronger the ecosystem can become.
3. Utility and Use Cases: For a cryptocurrency to thrive, it must offer utility and practical use cases. The Pi team has talked about various applications, including peer-to-peer transactions, smart contracts, and more. The development and implementation of these features will be essential.
4. Regulatory Environment: The regulatory environment for cryptocurrencies is evolving globally. How Pi navigates and complies with regulations in various jurisdictions will significantly impact its future.
5. Technology Development: The Pi network must continue to develop and improve its technology, security, and scalability to compete with established cryptocurrencies.
6. Community Engagement: The Pi community plays a critical role in its future. Engaged users can help build trust and grow the network.
7. Monetization and Sustainability: The Pi team's monetization strategy, such as fees, partnerships, or other revenue sources, will affect its long-term sustainability.
It's essential to approach Pi or any new cryptocurrency with caution and conduct due diligence. Cryptocurrency investments involve risks, and potential rewards can be uncertain. The success and future of Pi will depend on the collective efforts of its team, community, and the broader cryptocurrency market dynamics. It's advisable to stay updated on Pi's development and follow any updates from the official Pi Network website or announcements from the team.
BYD SWOT Analysis and In-Depth Insights 2024.pptxmikemetalprod
Indepth analysis of the BYD 2024
BYD (Build Your Dreams) is a Chinese automaker and battery manufacturer that has snowballed over the past two decades to become a significant player in electric vehicles and global clean energy technology.
This SWOT analysis examines BYD's strengths, weaknesses, opportunities, and threats as it competes in the fast-changing automotive and energy storage industries.
Founded in 1995 and headquartered in Shenzhen, BYD started as a battery company before expanding into automobiles in the early 2000s.
Initially manufacturing gasoline-powered vehicles, BYD focused on plug-in hybrid and fully electric vehicles, leveraging its expertise in battery technology.
Today, BYD is the world’s largest electric vehicle manufacturer, delivering over 1.2 million electric cars globally. The company also produces electric buses, trucks, forklifts, and rail transit.
On the energy side, BYD is a major supplier of rechargeable batteries for cell phones, laptops, electric vehicles, and energy storage systems.
how to sell pi coins effectively (from 50 - 100k pi)DOT TECH
Anywhere in the world, including Africa, America, and Europe, you can sell Pi Network Coins online and receive cash through online payment options.
Pi has not yet been launched on any exchange because we are currently using the confined Mainnet. The planned launch date for Pi is June 28, 2026.
Reselling to investors who want to hold until the mainnet launch in 2026 is currently the sole way to sell.
Consequently, right now. All you need to do is select the right pi network provider.
Who is a pi merchant?
An individual who buys coins from miners on the pi network and resells them to investors hoping to hang onto them until the mainnet is launched is known as a pi merchant.
debuts.
I'll provide you the Telegram username
@Pi_vendor_247
4. [2]
I
t’s time to bid goodbye to traditional fixed income prod-
ucts and, instead, embrace debt funds to achieve your
financial goals. If you prefer steady returns and low vola-
tility, debt funds can take you a long way.
WHAT IS DEBT FUND
A debt fund is a mutual fund scheme that invests in fixed in-
come instruments, such as bonds, corporate debt securities
and money market instruments, etc. that offer capital ap-
preciation. It is ideal for investors who want regular income,
but are risk-averse. Debt funds are less volatile and, hence,
are less risky than equity funds. They invest in short- and
long-term corporate and government bonds.
simplified
Debt funds
If you want to avoid the choppy markets and the erratic
returns, consider investing in debt funds
5. HOW debt funds WORK
Debt funds invest in either listed or unlisted debt instru-
ments, such as bonds or corporate debt securities at a cer-
tain price and later sell them at a margin. The difference be-
tween the cost and sale price accounts for the appreciation
or depreciation in the fund’s net asset value (NAV).
A debt scheme’s NAV depends on the interest rates of its
underlying assets and also on any upgrade or downgrade
in the credit rating of its holdings. Market prices of debt se-
[3]
an investor education and
awareness initiative by hdfc mutual fund
Debt Funds Simplified
6. curities change with movements
in interest rates. Let’s assume,
your debt fund owns a security
that yields 10 per cent interest. If
the interest rate in the economy
falls, new instruments that hit
the market would offer this lower
rate. To match this lower rate,
there would be an increase in
your fund’s instrument prices as
they have a higher coupon rate.
As a result of the increase in the
debt instrument’s value, your
fund’s NAV, too, would increase.
In terms of return, debt funds
that earn regular interest from
the fixed income paper during
the fund’s tenure are similar to
bank fixed deposits that earn in-
terest. This income gets added to
a debt fund on a daily basis. If the
interest comes, say, once a year,
it is divided by 365 and the debt
fund’s NAV goes up daily by this
small amount.
[4]
7. GILT FUNDS, SHORT- AND
LONG-TERM DEBT FUNDS
Like in any other mutual fund scheme category, there are
various types of schemes in the debt fund category too. They
are classified on the basis of the type of instruments they
invest in and the tenure of the instruments in the portfolio.
Some generic types of debt funds are explained below:
Income funds. They invest primarily in debt instruments
of various maturities in line with the objective of the funds
and any remaining funds in short-term instruments such as
money market instruments. These funds generally invest in
instruments with medium- to long-term maturities.
Short-term funds. Short-tenure debt funds primarily in-
vest in debt instruments with shorter maturity or duration.
These primarily consist of debt and money market instru-
ments and government securities. The investment horizon
of these funds is longer than those of liquid funds, but short-
er than those of medium-term income funds.
Floating rate funds (FRF). The objective of FRFs is to offer
steady returns to investors in line with the prevailing mar-
ket interest rates. While income funds invest in fixed income
debt instruments such as bonds, debentures and govern-
ment securities, FRFs are a variant of income funds with
the primary aim of minimising the volatility of investment
returns that is usually associated with an income fund.
FRFs invest primarily in instruments that offer floating in-
[5]
an investor education and
awareness initiative by hdfc mutual fund
Debt Funds Simplified
8. [6]
terest rates. Floating rate securities are generally linked to
the Mumbai Inter-Bank Offer Rate (MIBOR), i.e., the bench-
mark rate for debt instruments. The interest rate is reset pe-
riodically based on the interest rate movement.
Liquid funds. As the name suggests, liquid funds invest pre-
dominantly in highly liquid money market instruments and
provide liquidity.They invest in very short-term instruments
such as treasury bills and the inter-bank call money market,
commercial paper (CP) and certificates of deposit (CD) that
have residual maturities of up to 91 days.
Gilt funds. The word ‘gilt’ implies government securities. A
gilt fund invests in government securities of various tenures
issued by central and state governments. These funds gener-
ally do not have the risk of default since the issuer of the
instruments is the government. They offer both short-term
and long-term plans. Short-term plans invest in securities
issued by the central government and/or a state government
with short-to-medium-term residual maturities. Long-term
plans invest in securities issued by the central government
and/or a state government with medium-to-long-term ma-
turities. Gilt funds have a high degree of interest rate risk,
depending on their maturity profile.The longer the maturity
profiles of the instruments, the higher the interest rate risk.
Interest rate risk implies that there is an effect on the market
price of debt instruments when interest rates increase and
9. decrease. Market prices of debt instruments rise when inter-
est rates fall and vice-versa.
Interval funds. These invest in debt and money market in-
struments, and government securities having residual ma-
turity until the beginning of specified transaction periods
(STPs). Interval funds have characteristics of both open-
ended and closed-end funds. In other words, these funds
are open for subscription and redemption during the STPs.
Thereafter, units of these funds are available for trading on
stock exchanges.
Multiple yield funds. Multiple yield funds (MYFs) are hybrid
[7]
an investor education and
awareness initiative by hdfc mutual fund
Debt Funds Simplified
10. debt-oriented funds that invest predominantly in debt in-
struments and to some extent in dividend-yielding equities.
The debt instruments assist in generating returns with min-
imum risk and equities assist in long-term capital apprecia-
tion. MYFs invest predominantly in debt and money market
instruments of short-to-medium-term residual maturities.
Dynamic bond funds. DBFs invest in debt securities of dif-
ferent maturity profiles. These funds are actively managed
and the portfolio varies dynamically according to the inter-
est rate view of the fund managers.
Such funds give the fund manager the flexibility to invest
in short- or longer-term instruments based on his view on
the interest rate movement. DBFs follow an active portfolio
duration management strategy by keeping a close watch on
various domestic and global macroeconomic variables and
interest rate outlook.
Some other MF schemes, such as fixed maturity plans
(FMPs) which invest in debt instruments with a specific date
of maturity equal to the maturity date of the scheme, also
enjoy the status of debt funds. However, it is closed-end in
nature. Other hybrid schemes that invest in a combination
of debt and equity, such as monthly income plans (MIPs)
and capital protection oriented funds, also form a part of
debt funds. By investing in all these funds, investors can take
all the advantages of debt funds.
[8]
11. [9]
HOW IS IT DIFFERENT FROM OTHER
Mutual fund SCHEMES
In terms of operation, debt funds are not entirely differ-
ent from other mutual fund schemes. However, in terms of
safety, they score higher than equity mutual funds. For in-
stance, when the market falls, the NAVs of your equity funds
fall sharply, whereas in case of debt funds, the fall is not as
an investor education and
awareness initiative by hdfc mutual fund
Debt Funds Simplified
12. sharp. Having said that, debt funds can offer only moder-
ate returns, while equity funds, which are highly risky, offer
high returns over longer time horizon.
WHY INVEST IN DEBT MUTUAL FUNDS
A few major advantages of investing in debt funds are low
cost structure, stable returns, high liquidity and reasonable
safety. Debt funds also score on post-tax return. Dividends
from debt funds are exempt from tax in the hands of inves-
tors. The fund, however, has to pay a dividend distribution
[10]
13. tax of 28.325 per cent in case of individuals or Hindu un-
divided families. While long-term capital gains from debt
funds are taxed at 10 per cent without indexation and 20
per cent with indexation, short-term capital gains taxes are
levied according to the income-tax bracket one belongs to.
Thus, debt funds can be a good alternative to investors for
achieving their financial goals if they do not intend to bear
equity risk.
WATCH OUT
Choose the appropriate option in debt funds depending on
your tax bracket as dividend is subject to dividend distribu-
tion tax, which decreases returns.You can opt for a dividend
reinvestment option for better post-tax returns if you are in
the highest tax bracket. Else, go for the growth option.
WHO SHOULD INVEST IN DEBT MUTUAL FUNDS
There’s no fixed rule as to who
should invest in debt funds. It
depends on the requirement of
investors. Different types of in-
vestors invest in different types of
debt funds. For instance, if some-
one wants to park his emergency
funds, he can go for liquid funds.
As a thumb rule, 3-6 month’s
[11]
an investor education and
awareness initiative by hdfc mutual fund
Debt Funds Simplified
14. household expenses can be one’s emergency fund depend-
ing on the age. Roughly the amount that gives you the con-
fidence to combat emergencies in your household should be
enough. Anything more can actually affect your investment
portfolio. Those in their 20s and 30s might need more, so
garner funds for about six months’ expenses, whereas those
nearing retirement might not need much as they would have
built up their reserves. The amount you save for an emer-
gency depends ultimately on what makes you comfortable.
If you are the risk-averse type, then you might prefer a large
fund of, say, a year’s salary. If, however, you are the living-
on-the-edge type, then six months’ salary might suffice.
For those planning to buy a home after 2-3 years, investing
in a combination of both long- and short-term debt funds
might be a good idea. Also, a debt fund can be used in the
overall portfolio for diversification across asset classes. Debt
funds can also be used for portfolio derisking when you are
nearing your financial goals.
HOW TO PICK THE RIGHT DEBT FUND
Remember, it is the asset allocation (government securities,
corporate debt and marketable securities) that largely deter-
mines how a debt fund’s NAV will move. A close look at a
fund’s portfolio composition will give you an idea of the ex-
pected returns, risks and liquidity. So, when picking a fund,
[12]
15. watch out for a few things.
One, check the average maturity of the fund’s portfolio as
this has a bearing on your returns. The lower the average
maturity period, the lower the fund’s volatility and your re-
turns. On the other hand, a fund with a long maturity pe-
riod is likely to be more volatile, but the returns are likely to
be better.
[13]
an investor education and
awareness initiative by hdfc mutual fund
Debt Funds Simplified
16. Two, make sure the fund’s portfolio is reasonably liquid.
A large percentage of corporate debt in the portfolio does
not bode well in the short term, as it is relatively less liquid.
If the fund faces redemption pressure, it would be forced to
sell these securities at a discount, lowering the NAV. Also, be
wary of funds that hold a lot of unrated and unlisted debt.
Three, avoid schemes with small corpuses. That’s because
funds don’t disclose if there are any investor who owns a
[14]
17. [15]
substantial chunk of outstanding units. If there are such
investors and they decide to redeem their holdings, the fund
could be forced to sell holdings below the market rates.
Four, the best tool to capture the interest rate sensitivity
of a debt fund is modified duration. It tells you how much
the price of a bond would move if interest rates move up or
down by 1 per cent. The higher the modified duration, the
greater will be the impact of an interest rate change.
Mutual funds give you access to all the information in
their offer documents and other periodic disclosures for you
to make an informed decision. It is then up to you to take
the investment decision and sign the form, or channel the
money to suit your financial needs.
Also, you should understand how interest rate movements,
credit ratings and liquidity affect a debt fund’s performance.
Theoretically, if interest rates rise, the NAV of a debt fund
should fall. That’s because bond prices move in the opposite
direction as interest rates. A fall in bond prices leads to a de-
cline in a fund’s NAV. The opposite would happen if interest
rates fell. Of course, in an imperfect and illiquid market like
ours, this might not happen to the entire extent. Moreover,
if some bonds held by your debt fund are upgraded, their
prices would rise, leading to a drop in yields. That would, of
course, increase your fund’s NAV. So, be prepared for fluc-
tuations in your fund’s NAV. Even gilt funds (which invest
only in government securities) that are advertised as the saf-
an investor education and
awareness initiative by hdfc mutual fund
Debt Funds Simplified
18. est available investments, can witness sharp fluctuations in
their NAVs. That’s because prices of government securities
are a function of various economic factors, including inter-
est rates, macroeconomic data and liquidity in the banking
system. When these change, so do the gilt fund’s NAV.
DEBT FUND INVESTMENT OPTIONS
Offline agent. Your neighborhood distributor helps you
choose a mutual fund scheme, brings you the forms and,
[16]
19. perhaps, even fills them up for you. He also helps you submit
these to the respective mutual funds besides fetching your
account statements directly from your mutual fund. But
for all these services you are charged a transaction fee of
`100 (`150 for the first-time investor) for an investment of
`10,000 or more.
Online agent. If you prefer transacting from the comfort
of your home or office, you can reach out to various online
brokerages. These work with three types of accounts—In-
ternet trading account, demat account and savings bank
account with a partner bank. For a price, online brokerages
enable transactions in several instruments, such as shares
and gold, besides mutual funds.
Direct application to fund house. If you wish to apply to
a mutual fund directly, submit your application form along
with necessary documents at the mutual fund’s office or at
any point of acceptance (PoA) across the country (a list is
available in your scheme’s offer documents). Note that di-
rect application forms should be collected only from official
centres. Make sure the box for agent code on the top of your
application is not left blank. Write ‘Direct’ in it when you
submit the form to your mutual fund. Transaction charges
of `100 or `150, as mentioned above, are not imposed on
direct applications.
Fund’s website. Another way for direct investment is
through your mutual fund’s website. As this option is only
[17]
an investor education and
awareness initiative by hdfc mutual fund
Debt Funds Simplified
20. open to existing investors, you must submit physical forms
at least once to open your account with a mutual fund. Once
you get your account statement, download the online reg-
istration form, mention your folio number in it and submit
the same to the mutual fund. Your mutual fund will then
give you a code that you can use to log into your fund’s web-
site and transact subsequently.
USING DEBT FUNDS FOR STP AND SWP
Debt funds also allow you to take advantage of investing in
[18]
21. equity market along with growth on your principal amount
through systematic transfer plan (STP). With an STP, you
can transfer amounts in parts/tranches from one mutual
fund scheme to another, within the same fund house at reg-
ular intervals. Such a transfer averages the cost of purchase,
mitigating some market-related risks. Typically, an investor
first parks his funds in a liquid or a floating-rate debt fund
and then transfers them via STP to the scheme (usually eq-
uity or balanced) of his choice at regular intervals.
Systematic withdrawal plan (SWP) is a payment option
in a mutual fund that lets you redeem units worth a pre-
specified amount at a specific intervals (monthly, quarterly,
half-yearly or annually). This is suitable for the investors
who desire periodic income.
USING DEBT FUNDS FOR SPECIFIC GOALS
Choosing funds for children’s education. When it comes
to taking the mutual fund route for your children’s future,
the basic rules of the game are essentially the same as that
for any long-term goal. But here, merely investing will not
work. You need to be cautious about the risk management
of your corpus, especially when your child is close to going
for his higher studies. Along with investing, making the
money available at a time when your child needs it is equally
important. So, here debt funds play a vital role.
With time on your side, investing in equity has many ad-
[19]
an investor education and
awareness initiative by hdfc mutual fund
Debt Funds Simplified
22. vantages. But you need to keep a close eye on the market
once you are less than three years away from your goal. One
needs to derisk the portfolio when you are nearing your tar-
gets to ensure that the gains you have earned are not wiped
out. In other words, as you near your target, start shifting
from equity to debt so as to secure your gains.
When moving away from high-risk options, you could
choose to move into liquid and short-term debt funds or
slightly riskier funds in the debt space, such as bond and gilt
funds, depending on the interest rate scenario prevailing
at that time. For instance, if the interest rates are falling,
[20]
23. an investor education and
awareness initiative by hdfc mutual fund
short- to long-term bond and gilt funds would bode well. But
if interest rates remain flat or move upwards, stick to liquid
funds; they are safer than the rest of the debt schemes, if not
the safest of all financial instruments, and they would still
earn you more than your savings bank account.
The ideal way to build an adequate corpus for your child’s
future is to go step by step. The sooner you start, the better.
Of course, you also need to stop along the way occasionally
to make sure things are going as planned. The closer you get
to your destination, the more careful you need to be that you
are not taking a wrong turn.
Role of debt fund in retirement portfolio. As you age, light-
en your equity funds holdings marginally; the aggressive in-
vestor should cut equity in his portfolio from 80 per cent to
70 per cent, and the conservative investor from 60 per cent
to 40 per cent. With about 15 years away from retirement,
you should start playing steady and balance your exposure
to debt and equity. For instance, the conservative investor
may choose a 10-20 per cent higher debt allocation. On
the debt side, you may look at floating-rate funds and fixed-
maturity plans. Balanced funds are another option for the
semi-aggressive investor to strike a debt-equity mix.
Strategy. Follow the life stage approach to investing while
saving through mutual funds for retirement needs. As you
age, keep balancing the allocation between equity and debt.
With around 10 years away from your retirement, your pri-
[21]
Debt Funds Simplified
24. ority should be to ensure the safety of your accumulated
wealth. Plan out the derisking strategy and wait for an op-
portune time to migrate your money from volatile equity to
safer debt. By the time you are 1-2 years away from retire-
ment, a large portion should have been moved away from
equity into debt funds.
Acquiring a home. Investing in mutual funds not just helps
in creation of wealth but also helps in creating assets. They
play an important role in helping one build the biggest asset
of life—a home of your own.
Paying the equated monthly instalments (EMIs) has come
reasonably within the reach for most families, especially
when both partners work. However, accumulating a big
lump sum to pay the downpayment on the house remains
the biggest obstacle. This is where mutual fund schemes
come in handy. All those who live on rent constantly won-
der why they should be throwing their hard-earned money
out as expenses, when they could use it to buy a house and
create an asset. That is more so now, when property prices
have, perhaps, settled down and when home loans are eas-
ily available as housing finance companies are offering easy
loans to customers. If you are contemplating buying a house
in 2-3 years, mutual fund schemes can help you accumulate
the money, especially the downpayment for the loan.
How they help. Generating funds from friends, relatives or
[22]
25. pawning gold might not be the best ways to arrange the
money. Plan early to avoid depending on such sources as far
as possible. If you feel that your personal circumstances are
right for buying a home, start by creating a savings plan for
your downpayment. Get an idea of the purchase price and
the EMI payments that you can afford. Estimate what you’ll
need for margin money, which is usually 20 per cent of the
home price. Thereafter, calculate how much you must save
every month.
Where to invest. If the time horizon is less than a year or
an investor education and
awareness initiative by hdfc mutual fund [23]
Debt Funds Simplified
26. just a year away, it is
better to stash funds
in a money-market or
liquid fund. The vola-
tility in these funds is
the least as exposure
to equities is non-exis-
tent. The idea is to pre-
serve the capital and
not take undue risks
with the savings.
Choose at least two
debt funds for diver-
sification’s sake and
start saving through the systematic investment plan (SIP)
process. Ideally, keep the portfolio tilted towards debt even if
you are taking a bit of risk.
Strategise your moves. Remember, even debt funds suffer
from interest rate risk. So, ensure that you shift to less vola-
tile debt funds, such as short-term debt funds, at least two
years before reaching your goal. With just one year away
from your goal, shift your savings completely into a liquid
fund.Your small savings every month might not cramp your
household budget, but they will still create a lump sum big
enough to meet your downpayment needs for a home.
[24]
27. DISCLAIMER
MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS,
READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.
As part of its Investor Education and Awareness Initiative, HDFC Mutual
Fund has sponsored this booklet. The contents of this booklet, views,
opinions and recommendations are of the publication and do not necessarily
state or reflect views of HDFC Mutual Fund. HDFC Mutual Fund does not
accept any liability arising out of the use of this information.