A step-by-step guide to help you invest in debt funds

In the present era, Indian investors are looking for different means of investments that can provide them with decent returns. In such a scenario, mutual fund investments have gradually developed acceptance among many investors of the country. Simultaneously, investments on debt funds have also increased as it is one of the prominent types of mutual funds. Moreover, it is a safer option as the equity of debt funds is not highly volatile.

What is a debt fund?

A debt fund is comprised of securities like treasury bills and bonds. The investor who is investing in a debt fund provides an amount as a loan to the organization that has issued the bond or bill. Other money market instruments like government securities and commercial papers can be subject to debt funds. Given below are a few steps by which you can invest in debt funds easily.

Steps to follow when investing in debt funds

Nowadays, the setup of mutual fund investment has majorly shifted to the digital platform. All you need to do is stick to a reliable website that can help you to invest in the debt fund.

Step 1: Visit the host website

In India, there are different websites that can help a person to invest money in debt funds. You need to primarily find such a website. It is always the best to go through the user review of whichever website you choose.

Step 2: Enter authentic data

As you visit the host website for investing in the debt fund, try entering the data as per the requirements of the website. In general, the website asks for some financial data before allowing you to invest.

Step 3: Give the details of investment

You must provide the details regarding the investment on the site carefully. It includes the amount of investment and maturity period. Always remember that both the amount and maturity period are major determining factors of the returns that you get from the debt fund investment. To know more about debt funds, click on the above link.

Step 4: Complete the formalities of KYC

The KYC documents are mandatory for debt fund investment. You need to complete the formalities regarding e KYC first. It hardly takes 5 minutes to fill up the KYC documents online.

Step 5: Choose the right debt fund

Choosing the right debt fund is one of the vital jobs to do. In general, you can get a few options for the leading debt funds from the website. Make sure to choose the one that gives a decent return with minimum risks. Communicate with the fund manager and stay updated about the conditions of the market and the risk. The Net Asset Value in case of a debt fund falls with the elevation of the rate of interest in the economy. Furthermore, you need to consider the cost of investing in a debt fund. This is the fee that the fund pilots take. To avoid the fees, you can choose direct funds.

Debt fund investments can lead to you get medium returns even if it is affected by the market risks. To avoid massive loss, you can conveniently invest in the plans having longer tenures. Look for the dynamic bonds to invest as it offers the best returns. Furthermore, you should also consider that 20% of taxes are imposed on the returns incurred from the debt funds. So, you need to be careful about the indexation process of your debt fund investment.

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