Yesterday I wrote an article about Debt Mutual Funds.
I got a few questions about the liquidity and safety of a particular fund. So, I am adding a few more points.
Many Debt Mutual Funds like Nippon, Axis and HDFC offer instant redemption and you get the money within 30 minutes.
Safety of money means that the fund will not run away with your money. Market risk is there but it is almost zero for short-duration funds invested for a longer term.
In the past, withdrawals have been restricted even in the case of prestigious banks when the banks were facing issues.
Obviously, you should not blindly go for any Debt Mutual Fund just like you do not go for any FD offered at much higher interest rates by various NBFCs and smaller banks.
Similarly, in the case of Debt Mutual Fund, it all depends on various factors like the fund’s category, company, fund manager, duration of investment, past record, etc.
My article is about the overall advantages of Debt Mutual Fund over FDs and of course, both have their share of pros and cons. And there may be exceptional edge cases as well.
Only after considering all the factors should you make your investment decision.
