Securing Hannav Ledger...
Securing Hannav Ledger...
Glossary
Debt investments involve lending money to earn interest, including bonds, fixed deposits, debt mutual funds, and government securities.
Debt means you lend money and earn fixed or predictable interest — generally steadier but lower return than equity.
Debt returns depend on coupon, credit quality, and interest rate cycle. When rates rise, bond prices fall (inverse relationship). Credit risk events can cause defaults in corporate debt. Debt suits capital preservation and income needs.
₹5 lakh in a 7% FD yields ₹35,000 annual interest. Same amount in a short-duration debt fund may yield similar returns with mark-to-market fluctuations.
FDs up to ₹5 lakh per bank are DICGC insured. Debt funds carry NAV volatility and credit risk but offer potentially better tax efficiency for some investors.
Existing bond prices typically fall, hurting debt fund NAVs in the short term. New investments may earn higher yields going forward.
Many retirees keep partial equity for inflation protection while holding majority in debt and liquid instruments for expenses.