Debt mutual funds in India can be broadly categorized based on their investment objectives, maturity profiles, and underlying securities. Here are some common categories of debt mutual funds

Types of Debt Mutual

Debt mutual funds in India can be broadly categorized based on their investment objectives, maturity profiles, and underlying securities. Here are some common categories of debt mutual funds

Debt funds invest exclusively in fixed-income instruments securities like bonds, debentures, Government securities, and money market instruments such as certificates of deposit (CD), commercial paper (CP), and call money.

Here are the different types of debt funds in India:

  1. Government Securities (G-Sec) Funds: Invest in government-issued securities such as treasury bills and bonds. These funds carry low credit risk but are sensitive to interest rate movements.
  2. Corporate Bond Funds: Primarily invest in corporate bonds issued by companies. The risk and returns vary based on the creditworthiness of the issuing companies.
  3. Money Market Funds: Invest in short-term debt instruments such as treasury bills, commercial papers, and certificates of deposit. These funds aim for capital preservation and provide high liquidity.
  4. Short-term Funds: Invest in fixed-income securities with a short maturity period, typically less than 1-3 years. These funds aim for stable returns with relatively low-interest rate risk.
  5. Medium-term Funds: Invest in fixed-income securities with a medium-term maturity period, typically 3-5 years. These funds offer a balance between income generation and interest rate risk.
  6. Long-term Funds: Invest in fixed-income securities with a longer maturity period, typically more than 5 years. These funds may have higher interest rate risk but potentially higher returns.
  7. Credit Opportunities Funds: Focus on investing in lower-rated debt instruments with the aim of generating higher yields. These funds carry higher credit risk and require careful credit analysis.
  8. Dynamic Bond Funds: Have the flexibility to invest across various durations and debt instruments based on changing market conditions and interest rate expectations. These funds aim to optimize returns by actively managing the portfolio.
  9. Fixed Maturity Plans (FMPs): Close-ended funds with a fixed investment horizon and a portfolio of debt instruments that align with the maturity of the scheme. These funds offer a predetermined return and maturity date.

Each type of debt fund has its own risk-return characteristics and investment objectives. Investors should consider their risk tolerance, investment horizon, and income requirements before selecting the most suitable type of debt fund.

Six Rules to Intelligent Investing in Mutual Funds

Know your risk profile: Ask yourself – Can you live with volatility? Or are you a low-risk investor? Would you be satisfied if your fund invests in fixed-income securities, and yields low but sure-shot returns?

Identify your investment horizon: Invest in an equity fund only if you are willing to stay on for at least two years. For income and gilt funds, have a one-year perspective at least. For anything less than one year, the only option among mutual funds is liquid funds.

Read the offer document carefully
Go through the fund fact sheet
Diversify across fund houses

Track your investments through websites like,, and, which are compiled on a quarterly basis.

And the caveat …

Mutual funds are not immune to risk: risk is inherent to their operation. Different plans have differing degrees of risk, depending upon the fund’s management style and its objective; it is important that you know the risk involved in your fund(s).


As far as statistics are concerned, real estate/property investment is, and always has been, the most powerful type of investment for building wealth. It has been said that over 90% of the world’s millionaires got there by owning property. Investing in property offers two major benefits: capital growth and tax advantages.

In the early stages of property investment, rental incomes often don’t exceed your outgoings on a property – particularly the costs of servicing the loan. But as the property increases in value, rents tend to rise faster than costs and the property generates net income. However, it would not be correct to recommend the property to the exclusion of other investments. A strong portfolio is a diversified one, with investments spread across different asset classes.

Advantages of Investing in Property

  • No investment today offers the stability, and simplicity, offered by property investment.
  • While the Stock Market offers high returns, many investors have found it to be a volatile and dangerous place.
  • No other investment allows you to purchase with other peoples’ money (banks) and pay this back with other peoples’ money (rental income from tenants)!
  • Although there is no law stating that your property will increase in value each year, it is a well-documented fact that, on average, the value of a property doubles at least every seven years provided the property has been carefully selected.
  • How much can you afford?

What kind of property you can afford is basically a function of how much you can borrow. The monthly home loan installment has two distinct parts: the interest (calculated at the loan interest rate on the principal outstanding for that month) and the principal balance.

Tax advantages of taking a housing loan. A housing loan comes with two tax benefits which further reduces the cost of your borrowing. One is an exemption for interest paid on a housing loan, currently up to an interest paid of Rs 1.5 lakh per year on a self-occupied house and UNLIMITED on a rented-out house. The other is a tax break on principal repaid in the year under IT section 80C subject to the current maximum overall limit of Rs 1,00,000 under this section.

How does indexation work?

Let’s take an example. If you had bought an asset during the financial year 1981-82 for Rs 3 lakh, and sold it in 1993-94 for Rs 8 lakhs, your capital gains will be less than the apparent Rs 5 lakh, due to indexation as below:-

Cost in 1981-82 (base year, when cost inflation index is 100) Rs 3 lakhs

Cost inflation index in 1993-94 when the asset was sold. 244

Therefore, cost after factoring in the cost inflation index. (Rs 3 lakh x 244/100)Rs 7.32 lakhs

Net capital gain (8 lakhs ‘minus’ 7.32 lakh) Rs 68,000 Only

The benefit of the cost of inflation index is also available in the case of cost of improvement from the year in which the improvement is effected.


Gold has worked down from Alexander’s time. When something holds good for two thousand years, I do not believe it can be so because of prejudice or mistaken theory.

– Bernard Baruch (1870-1965), American millionaire

Over the ages, Gold has worked as an investment, especially during times of economic crisis, political strife, and wars. It has also been used to back currencies. In the year 2011, almost 980 tonnes of gold were bought in India, the world’s largest market for gold, a 40% jump over the corresponding period last year. Such is the demand for gold in India that prices have increased in the long term, even in the last decade, when many central banks sold their gold holdings. The compounded annual growth rate (CAGR) of gold prices over the last 10 years stands at 9-10 % CAGR,  The price of gold is expected to rise also because Central banks of several countries have been adding to their gold reserves and the cost of production is rising. Moreover, activities in many African mines have been reduced due to strife, adding to the low supply situation.

What kind of gold should you buy? If you see this purely as an investment, then SGBs issued by RBI are the best way to invest in Gold and you can also buy it in the form of physical gold bars, biscuits, or coins or even in a dematerialized form. The disadvantage of buying gold in the form of Jewellery is that its re-sale is not always a profitable proposition, one cannot be sure of the purity, and handling and storing remains an issue. Bars and biscuits are better as they can easily be exchanged for cash even though while purchasing these may be priced up to 8-20% above the market value of Gold.

The modern way to invest is buying dematerialized gold from a commodity exchange – it eliminates risks related to physical storage and theft, reducing paperwork and facilitating the easy transfer of holdings through the electronic mode. However, a very good option that has emerged now is buying Gold Exchange Traded Funds (Gold ETFs) on stock exchanges. These are typically in the denomination of single units, generally representing one gram of gold each. Many companies, like Reliance, Kotak, Quantum, Benchmark, and UTI, are offering the same on NSE (National Stock Exchange) and they are bought and sold exactly like stocks. In case you wish to buy in small quantities regularly so as to build up a good gold portfolio over a period of time, Gold Mutual Funds are the best option. Here you buy Gold units exactly like you buy any other units – in small nibbling through Systematic Investment Plans (SIP) and/or in bulk.

Where should you buy Physical gold from? Bullion experts recommend that it is best to buy gold from a reputed jeweler. Banks that sell gold bars charge a premium as high as 8-20% for providing you with a ‘certificate of purity’, but they are not allowed to buy it back and the jeweller that you sell it to has no use for that certificate. You end up paying a premium for no real value addition. If you buy from reputed jewelers, not only do they buy it back from you, but they also give you the prevailing market rate for it.

The paths taken to financial independence vary depending on the risk profile of the investors, the amount of capital they begin with, and the targeted capital that they wish to end up with. There is also a factor of luck and timing that many investment advisors do not like to acknowledge but is a fact of investing and planning. The most carefully laid out plans can be challenged by special, unforeseen circumstances. And conversely, sometimes those who did not have a plan end up reaching financial nirvana by sheer good luck and fortune. But though we respect the power of luck and timing, we still believe that most people who plan their financial future will have a better understanding of what they need to do to achieve their targets than those who rely only on luck. The suggested broad financial strategy below is only a guideline since the actual personal plan will be entirely individual-specific as per his requirements, risk profile, commitments, priorities, market conditions, state of the economy, and finally, what’s available in the market!!.

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