The Reserve Bank of India has decreased the policy repo rate by a substantial margin. As a result, it is the most convenient time to invest some of your savings in debt mutual funds. You can expect to get desired returns on your investment if you select one of the aptest MFs. You need to keep in mind that debt MFs are ideal not only because of the rate cuts. The fact is that several other vital factors have contributed to the value of debt MFs.
Understand the implications of the new policy
These steps by the RBI are indicative of the fact that there will not be any increase in the policy repo rates in the times to come. Some of the most experienced financial advisors and economists of the country have gone on record to say that there might be further rate cuts in the policy repo rates. Hence, it is safe to say that the situation is going to be even more favorable for the people who have invested their money in debt MFs.
Planning is always crucial
As an investor, you must plan your objectives properly as well as reasonably. When you plan out a course of action for your investments, you must take into account the number of years or months for which you can stay invested. The policy rate cuts are incredibly beneficial for those who want to invest for short term to medium terms. This does not mean that investing in debt mutual funds for a longer duration will be a fruitless ploy. It merely implies that you can be in a better state if you are a short-term investor.
Stay away from G-sec funds
Almost all debt mutual fund experts believe that if you want the desired ROI, then you should invest your money in government sector funds. At the same time, long-term bond funds also do not seem to be highly beneficial in the current environment. The future predictions about these areas of investment also do not look exciting.
What is the opinion of your FA?
If your financial advisor is suggesting that you invest in such debt mutual funds, then you must ask them about the reasons because of which they consider these MFs to be advantageous. The general perception of such funds matters a lot. At times, a substantial increase in investors can make them more profitable. But at present, such developments seem to be very unlikely. So, you must keep your wits about you before you go ahead and take such decisions with regards to your MF portfolio.
PSU debt schemes might be ideal
The current economic scenario in India must be analyzed for proper assessment of your debt mutual fund assessments. Experts suggest that opting for banking debt schemes can be one of the surest ways to increase your returns on investment. They will be ideal not only for the short-term, but they might give decent results if you stay invested for more than two years. PSU debt funds might also give you the desired results.