Debt funds are for investors who seek safety of capital or regular income from investment and/or want to park money for short periods.
But debt funds are of various types.
Like in banks, you can open a savings account, where you can put and remove money whenever you want. However, it doesn’t make sense to keep money idle, if you are not likely to use it for some time. You may, in such a case, open a fixed deposit – where the money is locked for a certain period allowing you to earn a higher rate of interest. You may also opt for a recurring deposit, wherein you keep investing a fixed amount every month for a pre-defined period of time. All these products help you with different requirements.
Similarly, among Mutual Funds too there are variants available in the debt fund category to fulfill various needs of investors, like – Liquid Funds, Income Funds, Government Securities and Fixed Maturity Plans.
An investor would be advised to select schemes based on one’s unique requirements.
