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When someone says the word #SIP, most of us associate it with equity #mutualfunds. But did you know that SIPs are possible in the fixed income asset class as well?
#Debt SIPs can be one of the most useful ways to meet your short term goals, recurring goals, and asset allocation needs.
SIPs in #debtfunds can be used to meet yearly school fees, build an emergency reserve, your annual vacation, regular recurring expenses, working capital, etc.
Based on the #investment horizon a debt SIP can also be used to meet long term goals and be a recurring deposit replacement.
Fixed income investments aren’t as volatile as #equity instruments and usually offer a predictable rate of return. Holding a debt mutual fund is more advantageous than a fixed deposit in most cases.
Unlike a #fixeddeposit, the debt mutual fund may not have a lock-in period, can easily be liquidated, and is also tax efficient. #tax
The returns that liquid/low duration funds offer beats most savings bank interest rates and can, therefore, be used as a savings bank a/c replacement. Long term debt funds are also suitable instruments for #investors who may be averse to equity.
When selecting a fixed income product, it is important to keep in mind that not all debt products are created equally. It is important to match the asset to your requirements, risk appetite, and duration. This is where a #financialadvisor comes in.
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