If you are planning to invest in Mutual Funds, then first know the difference between Debt, Equity and Hybrid Funds, then make a strategy.
Business News Desk – Mutual funds are one of the most preferred schemes for investment. In the last few years, the number of people investing in MF through SIP has increased rapidly. The reason for this is the returns received in mutual funds. Despite all the market risks, experts believe that its average return in the long term is around 12 percent, which is much better than any other scheme. Money grows faster because of the benefits of compounding. There are many ways to invest in mutual funds such as debt funds, equity funds and hybrid funds. All have different risk and wealth creation capabilities. If you have not invested money in this scheme till now, but are thinking about it now, then you should understand the difference between debt, equity and hybrid funds very well, only then decide how you should invest. Have to choose a fund.
debt fund
If you want to invest money in mutual funds for a short period and do not want to take much risk, then you can invest in debt funds. In debt funds, the money taken from investors is invested in fixed income securities like bonds, government securities, treasury bills and non-convertible debentures etc. It is clear that debt fund money is invested in a safe place. Debt funds are considered safer than equity. There is no problem of liquidity in this. That means you can withdraw your money whenever you want. But investors in debt funds should not expect high returns like equity. There is a provision for tax on profits from debt funds.
equity fund
Equity funds are also known as stock funds. In equity your money is invested in stocks. If the investment plan is for a long term then the investor is advised to invest in equity funds, because in the long run these can compensate for the losses caused by market fluctuations. If equity fund is for long term then it has the possibility of getting better returns than debt fund. However, there is also risk involved. The possibility of negative returns is higher when the market is stable.
hybrid fund
Hybrid funds are mutual fund schemes that invest in both equity and debt. Many times the fund money is also invested in gold. If you want to avoid market risk then you can choose hybrid fund. Hybrid funds are also called balanced funds because they invest in both equity and debt instruments. Investing in different asset classes provides the benefit of diversification. Hybrid funds have the ability to withstand market fluctuations. These give good returns.
