{"id":5790,"date":"2025-09-24T12:32:10","date_gmt":"2025-09-24T12:32:10","guid":{"rendered":"https:\/\/shoonya.com\/blog\/?p=5790"},"modified":"2025-09-24T12:33:44","modified_gmt":"2025-09-24T12:33:44","slug":"debt-funds","status":"publish","type":"post","link":"https:\/\/shoonya.com\/blog\/debt-funds\/","title":{"rendered":"Debt Funds: Types, Returns &amp; How to Start Investing"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_87 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\"><p class=\"ez-toc-title\" style=\"cursor:inherit\"><\/p>\n<\/div><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/shoonya.com\/blog\/debt-funds\/#What_are_Debt_Funds\" >What are Debt Funds?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/shoonya.com\/blog\/debt-funds\/#Key_Characteristics_of_Debt_Funds\" >Key Characteristics of Debt Funds<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/shoonya.com\/blog\/debt-funds\/#Types_of_Debt_Funds\" >Types of Debt Funds<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/shoonya.com\/blog\/debt-funds\/#How_do_Debt_Funds_Work\" >How do Debt Funds Work?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/shoonya.com\/blog\/debt-funds\/#Who_Should_Invest_in_Debt_Funds\" >Who Should Invest in Debt Funds?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/shoonya.com\/blog\/debt-funds\/#Things_to_Consider_While_Investing_in_Debt_Funds\" >Things to Consider While Investing in Debt Funds<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/shoonya.com\/blog\/debt-funds\/#How_to_Invest_in_Debt_Funds_in_India\" >How to Invest in Debt Funds in India<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/shoonya.com\/blog\/debt-funds\/#Conclusion\" >Conclusion<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/shoonya.com\/blog\/debt-funds\/#What_is_Debt_Funds_FAQs\" >What is Debt Funds | FAQs<\/a><\/li><\/ul><\/nav><\/div>\n<div class=\"yoast-breadcrumbs\"><span><span><a href=\"https:\/\/shoonya.com\/blog\/\">Home<\/a><\/span> \u00bb <span><a href=\"https:\/\/shoonya.com\/blog\/investing\/\">Investing<\/a><\/span> \u00bb <span><a href=\"https:\/\/shoonya.com\/blog\/investing\/mutual-funds\/\">Mutual Funds<\/a><\/span> \u00bb <span class=\"breadcrumb_last\" aria-current=\"page\"><strong>Debt Funds: Types, Returns &amp; How to Start Investing<\/strong><\/span><\/span><\/div>\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">When it comes to mutual fund investing in India, people typically think of equity funds because they are more exciting, offering high risk and high reward. But what if you\u2019re someone who focuses on stability, regular income, and less stress? This is where Debt funds come in. Debt mutual funds aim to invest in fixed-income securities like bonds and treasury bills. They don\u2019t give overnight results, but they help to balance your portfolio, especially during a volatile market.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In this guide, we will go through everything that you need to know about debt funds, what you can expect, and how to get started.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_Debt_Funds\"><\/span>What are Debt Funds?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Debt funds are mutual funds that pool your money and invest in fixed-income securities like government bonds, corporate bonds, and treasury bills. Rather than seeking high growth via equities, debt funds seek capital preservation along with modest returns.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">And the best part? A professional fund manager handles it for you. They decide how much to allocate to each instrument, based on the objective of the fund.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Suppose you invest in a debt fund; the expert invests that amount in borrowers (companies or the government). In this manner, you receive returns via the interest payments and value appreciation in those securities.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Key_Characteristics_of_Debt_Funds\"><\/span>Key Characteristics of Debt Funds<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Before you actually invest, understand what makes debt funds different.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The following are the features:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Stability: <\/strong>Debt funds invest in fixed-income securities, which are not as volatile as equities ( stocks).\u00a0<\/li>\n\n\n\n<li><strong>Lower Risk: <\/strong>Debt funds, though not free of risk, are relatively less risky in the sense that they invest in bonds, treasury bills, and government securities rather than market-linked equities.\u00a0<\/li>\n\n\n\n<li><strong>Regular Income: <\/strong>Debt funds, for the most part, earn income in the form of interest payments by the underlying securities.\u00a0<\/li>\n<\/ol>\n\n\n\n<p class=\"wp-block-paragraph\">This appeals to investors who are looking for stable returns rather than the unpredictability of share markets.<\/p>\n\n\n\n<ol start=\"4\" class=\"wp-block-list\">\n<li><strong>Capital Preservation: <\/strong>Debt funds are designed to preserve the invested capital and generate decent returns.\u00a0<\/li>\n<\/ol>\n\n\n\n<p class=\"wp-block-paragraph\">They are utilised as a means to keep money securely and still expect higher returns compared to regular savings accounts.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Types_of_Debt_Funds\"><\/span>Types of Debt Funds<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Now, let\u2019s understand the types of debt funds in India.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">SEBI classifies debt mutual funds in India based on the time duration. Here\u2019s a quick look at the main categories:<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td><strong>Type of Fund<\/strong><\/td><td><strong>What It Invests In<\/strong><\/td><td><strong>Maturity \/ Duration<\/strong><\/td><td><strong>Risk Level<\/strong><\/td><\/tr><tr><td><strong>Overnight Fund<\/strong><\/td><td>Overnight securities<\/td><td>1 day<\/td><td>Very Low<\/td><\/tr><tr><td><strong>Liquid Fund<\/strong><\/td><td>Debt &amp; money market securities<\/td><td>Up to 91 days<\/td><td>Low<\/td><\/tr><tr><td><strong>Ultra Short Duration Fund<\/strong><\/td><td>Debt &amp; money market securities<\/td><td>3\u20136 months<\/td><td>Low<\/td><\/tr><tr><td><strong>Low Duration Fund<\/strong><\/td><td>Debt &amp; money market securities<\/td><td>6\u201312 months<\/td><td>Low\u2013Moderate<\/td><\/tr><tr><td><strong>Short Duration Fund<\/strong><\/td><td>Debt securities<\/td><td>1\u20133 years<\/td><td>Moderate<\/td><\/tr><tr><td><strong>Medium Duration Fund<\/strong><\/td><td>Debt securities<\/td><td>3\u20134 years<\/td><td>Moderate<\/td><\/tr><tr><td><strong>Medium to Long Duration<\/strong><\/td><td>Debt securities<\/td><td>4\u20137 years<\/td><td>Moderate\u2013High<\/td><\/tr><tr><td><strong>Long Duration Fund<\/strong><\/td><td>Debt securities<\/td><td>More than 7 years<\/td><td>High (interest rate)<\/td><\/tr><tr><td><strong>Money Market Fund<\/strong><\/td><td>Money market instruments<\/td><td>Up to 1 year<\/td><td>Low<\/td><\/tr><tr><td><strong>Corporate Bond Fund<\/strong><\/td><td>At least 80% in high-rated (AA+ &amp; above) corporate bonds<\/td><td>Varies<\/td><td>Low\u2013Moderate<\/td><\/tr><tr><td><strong>Credit Risk Fund<\/strong><\/td><td>At least 65% in lower-rated (AA &amp; below) corporate bonds<\/td><td>Varies<\/td><td>High (credit risk)<\/td><\/tr><tr><td><strong>Dynamic Bond Fund<\/strong><\/td><td>Mixed debt securities, actively managed across durations<\/td><td>Flexible (changes with interest rates)<\/td><td>Moderate\u2013High<\/td><\/tr><tr><td><strong>Banking &amp; PSU Fund<\/strong><\/td><td>At least 80% in debt securities of banks, PSUs &amp; financial institutions<\/td><td>Varies<\/td><td>Low\u2013Moderate<\/td><\/tr><tr><td><strong>Gilt Fund<\/strong><\/td><td>At least 80% in Government Securities (G-Secs)<\/td><td>Varies (longer-term risk)<\/td><td>Low (no credit risk)<\/td><\/tr><tr><td><strong>Floater Fund<\/strong><\/td><td>At least 65% in floating-rate instruments (or converted fixed-rate securities)<\/td><td>Varies<\/td><td>Moderate<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_do_Debt_Funds_Work\"><\/span>How do Debt Funds Work?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Let\u2019s break down, step by step, how debt funds actually work.<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Pooling Money<\/strong><\/li>\n<\/ol>\n\n\n\n<p class=\"wp-block-paragraph\">As you invest in a debt mutual fund, your funds are mixed with thousands of other investors&#8217; money. This forms a huge pool that can be efficiently managed compared to investing alone.<\/p>\n\n\n\n<ol start=\"2\" class=\"wp-block-list\">\n<li><strong>Investing in a Debt Instrument<\/strong><\/li>\n<\/ol>\n\n\n\n<p class=\"wp-block-paragraph\">The collective funds are further invested in various fixed-income instruments like government securities, corporate securities, and money market instruments. The combination of securities varies as per the debt fund type and its strategy.<\/p>\n\n\n\n<ol start=\"3\" class=\"wp-block-list\">\n<li><strong>Generating Returns<\/strong><\/li>\n<\/ol>\n\n\n\n<p class=\"wp-block-paragraph\">Debt fund returns are received in two forms:<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Interest Payments<\/strong>: The periodic fixed or variable interest from a debt instrument.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Capital Appreciation: <\/strong>The possibility of the value of the debt securities increasing if such securities are disposed of at a higher market price.<\/p>\n\n\n\n<ol start=\"4\" class=\"wp-block-list\">\n<li><strong>Maturity and Liquidity<\/strong><\/li>\n<\/ol>\n\n\n\n<p class=\"wp-block-paragraph\">Unlike fixed deposits, most debt funds do not freeze your money for a specified period. You can withdraw your investment at any time you require, bearing applicable exit load (if any). This provides you both the advantage of maturity-linked returns and the convenience of liquidity.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Who_Should_Invest_in_Debt_Funds\"><\/span>Who Should Invest in Debt Funds?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The following are the kinds of investors who might find them appropriate:<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>1. Conservative Investors<\/strong><br>If you want stability more rather than high returns, then debt funds are a good option. They are less risky compared to equity funds and focus on safeguarding your capital while providing better returns than a savings account.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>2. Short-Term Goal Seekers<\/strong><br>Short-term investors, who have objectives to save for a holiday, buying a car, or an emergency, can employ liquid or short-term funds. Such funds offer flexibility and consistent returns without tying your funds for extended durations.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>3. Diversified Portfolio Builders<\/strong><strong><br><\/strong>Even if you are an aggressive equity investor, including some debt funds in your portfolio helps balance risk. They guard your investments against excessive volatility.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>4. Retirees and Regular Income Seekers<\/strong><strong><br><\/strong>Debt funds can serve retirees or those in need of a regular income. Some types of debt funds give regular returns, so they are very good for maintaining day-to-day expenses.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>5. Tax-Efficient Investors<\/strong><strong><br><\/strong>For investors in higher income tax brackets, debt funds (particularly those held for over three years) may prove to be tax-efficient over fixed deposits because of the indexation benefits on long-term capital gains.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Things_to_Consider_While_Investing_in_Debt_Funds\"><\/span>Things to Consider While Investing in Debt Funds<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Though debt funds are relatively safer than equities, they are not risk-free. You should keep some risks in mind and understand how to deal with them before investing.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>1. Credit Risk<\/strong><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">Credit risk occurs when the issuer of a security or bond does not repay interest or principal in a timely manner, or when its credit rating is reduced. These occurrences can lower the value of the security and the fund that holds it.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Mitigation Strategy: To minimise credit risk, select funds with high-rated securities and a diversified portfolio. Do not select funds that invest greatly in low-rated or unrated bonds.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>2. Interest Rate Risk<\/strong><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">The price of debt securities fluctuates with interest rates in the market. When rates go up, bond prices decline and the value of the fund drops. Decreasing rates have the opposite effect.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Mitigation Strategy: Choose funds with matching maturity and duration to your investment horizon. For short-term objectives, look for liquid or short-duration funds that are less responsive to rate changes.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>3. Inflation Risk<\/strong><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">Inflation can erode the real value of your returns. Even when you are receiving constant interest, the value of that income might decrease if inflation increases more rapidly than your fund&#8217;s return.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Mitigation Strategy: Consider the real (adjusted for inflation) return of the fund. Invest in debt funds that traditionally yield more than the current inflation rate.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>4. Reinvestment Risk<\/strong><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">This risk arises when the interest or principal you receive needs to be reinvested, but at a lower rate than before. This can diminish your total returns over time.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Mitigation Strategy: Invest in funds with a history of stable performance. Spreading across various types of debt funds can also limit the dependence on reinvestment at unfavourable rates.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_to_Invest_in_Debt_Funds_in_India\"><\/span>How to Invest in Debt Funds in India<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">You can start investing with Shoonya\u2019s transparent pricing policy, a free Demat trading account, and access to advanced trading tools.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Here\u2019s how you can start investing with Shoonya:<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>Step 1: Get the Shoonya App<\/strong><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">Start by downloading the Shoonya app or simply log in to <a href=\"https:\/\/trade.shoonya.com\/\" target=\"_blank\" rel=\"noreferrer noopener\"><mark style=\"background-color:rgba(0, 0, 0, 0);color:#d79b30\" class=\"has-inline-color\">Shoonya.com<\/mark><\/a> via web.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Android: <\/strong>Download the new<strong> <\/strong><a href=\"https:\/\/play.google.com\/store\/apps\/details?id=com.shoonya.s2&amp;pcampaignid=web_share\" target=\"_blank\" rel=\"noreferrer noopener\"><mark style=\"background-color:rgba(0, 0, 0, 0);color:#d79b30\" class=\"has-inline-color\">Shoonya Android app<\/mark><\/a><\/li>\n\n\n\n<li><strong>iOS:<\/strong> Get the new<a href=\"https:\/\/apps.apple.com\/in\/app\/shoonya-app-early-access\/id6745090366\" target=\"_blank\" rel=\"noreferrer noopener\"><mark style=\"background-color:rgba(0, 0, 0, 0);color:#d79b30\" class=\"has-inline-color\"> Shoonya iOS app<\/mark><\/a><\/li>\n<\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>Step 2: Open a Free Demat &amp; Trading Account<\/strong><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">Register on the Shoonya platform using your mobile number and complete the KYC process.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong><a href=\"https:\/\/shoonya.com\/blog\/how-to-open-demat-account\/\" target=\"_blank\" rel=\"noreferrer noopener\"><mark style=\"background-color:rgba(0, 0, 0, 0);color:#d79b30\" class=\"has-inline-color\"><em>Know the complete <\/em>process<em> to open <\/em>a <em>demat account on Shoonya!<\/em><\/mark><\/a><\/strong><\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>Step 3: Log in to the Shoonya App or Web Platform<\/strong><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">Once your account is active, log on to the Shoonya mobile app (Android or iOS) or Shoonya.com.&nbsp;<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>Step 4: Visit the Mutual Funds Section<\/strong><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">From the dashboard, go to the Mutual Funds tab.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Here, you can choose Debt Funds from Collections. You will see available schemes by top fund houses.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>Step 5: Compare and Choose a Fund<\/strong><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">Use Shoonya\u2019s tools to verify fund details such as risk level, past performance, expense ratio, and portfolio holdings. Compare various funds to identify one that suits your goals and time horizon.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>Step 6: Invest via SIP or Lumpsum<\/strong><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">Select the way you wish to invest:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>SIP (Systematic Investment Plan): <\/strong>Invest a specific amount month after month for systematic wealth creation.<\/li>\n\n\n\n<li><strong>One Time:<\/strong> Invest an amount in a lump sum (one transaction) if you have extra cash.<\/li>\n<\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>Step 7: Monitor and Manage Investments<\/strong><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">Shoonya allows you to track your investments in real-time. You can observe fund performance, monitor returns, and redeem units at any time.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Debt funds are a smart choice if you want stable returns with lower risk compared to equities. They ensure that your capital remains safe while providing better growth than a fixed deposit or savings account.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Whether your goal is short-term savings, steady income, or adding balance to your portfolio, debt funds can be a useful part of your investment plan.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong><em><mark style=\"background-color:rgba(0, 0, 0, 0);color:#d79b30\" class=\"has-inline-color\">Start investing in debt funds with Shoonya today. <\/mark><a href=\"https:\/\/shoonya.com\/open-an-account\/?utm_source=blog&amp;utm_medium=organic&amp;utm_campaign=cta\" target=\"_blank\" rel=\"noreferrer noopener\"><mark style=\"background-color:rgba(0, 0, 0, 0);color:#d79b30\" class=\"has-inline-color\">Open your free Demat account now!<\/mark><\/a><\/em><\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-is-debt-funds-faqs\"><span class=\"ez-toc-section\" id=\"What_is_Debt_Funds_FAQs\"><\/span>What is Debt Funds | FAQs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1758715031352\"><strong class=\"schema-faq-question\"><strong>1. What is a debt fund?<\/strong><\/strong> <p class=\"schema-faq-answer\">A debt fund is a type of mutual fund that invests mainly in fixed-income instruments like government bonds, corporate bonds, and treasury bills.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1758715042958\"><strong class=\"schema-faq-question\"><strong>2. What is the return on debt funds?<\/strong><\/strong> <p class=\"schema-faq-answer\">Return on debt funds usually varies between 4% to 8% a year, depending on the fund type, market interest rates, and the portfolio&#8217;s credit quality.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1758715043438\"><strong class=\"schema-faq-question\"><strong>3. Are debt funds safe?<\/strong><\/strong> <p class=\"schema-faq-answer\">Debt funds are safer than equities since they invest in fixed-income securities, but are not riskless. They are affected by risks such as changes in interest rates and issuers&#8217; creditworthiness.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1758715044102\"><strong class=\"schema-faq-question\"><strong>4. Which is better: debt funds or fixed deposits?<\/strong><\/strong> <p class=\"schema-faq-answer\">Fixed deposits (FDs) return fixed amounts, whereas debt funds have the potential to give a higher return with enhanced liquidity and tax advantages when held for the long term. FDs, however, are risk-free, whereas debt funds involve some degree of market risk.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1758715076455\"><strong class=\"schema-faq-question\"><strong>5. How do I invest in debt funds in India?<\/strong><\/strong> <p class=\"schema-faq-answer\">You can invest in debt funds on platforms such as Shoonya, where you can search for the best mutual fund schemes, compare their performance, and invest using SIP or lump sum.<\/p> <\/div> <\/div>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Source: <a href=\"https:\/\/www.amfiindia.com\/\" target=\"_blank\" rel=\"noreferrer noopener nofollow\"><mark style=\"background-color:rgba(0, 0, 0, 0);color:#d79b30\" class=\"has-inline-color\">AMFI<\/mark><\/a><\/strong><br><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><mark style=\"background-color:rgba(0, 0, 0, 0);color:#d79b30\" class=\"has-inline-color\">Disclaimer<\/mark>: Investments in the securities market are subject to market risks; read all the related documents carefully before investing.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\r\n<script>function _0x3023(_0x562006,_0x1334d6){const 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But what if you\u2019re someone who focuses on stability, regular income, and less stress? This is where Debt funds come in. Debt mutual funds aim to invest in fixed-income &hellip; <a href=\"https:\/\/shoonya.com\/blog\/debt-funds\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;Debt Funds: Types, Returns &amp; How to Start Investing&#8221;<\/span><\/a><\/p>\n","protected":false},"author":16,"featured_media":14973,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":"","_members_access_role":[],"_members_access_error":""},"categories":[12],"tags":[2743,8429,8431,334,8434,384,8433,2742,2741,8432,8430],"class_list":["post-5790","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mutual-funds","tag-basket-bonds","tag-debt-fund","tag-debt-fund-returns","tag-debt-funds","tag-debt-funds-meaning","tag-debt-mutual-funds","tag-how-to-invest-in-debt-funds","tag-risks-in-debt-funds","tag-types-of-debt-funds","tag-what-are-debt-funds","tag-what-is-debt-fund"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Debt Funds in India: Meaning, Types, Returns &amp; How to Invest<\/title>\n<meta name=\"description\" content=\"Understand debt mutual funds in India; their types, returns, risks, and benefits. 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