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Debt Funds - A Safer Bet in a Volatile Market

By Finserv MARKETS - Dec 24,2019
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Benefits of Debt Funds in a Volatile Market

Debt funds have been designed to make sure that investors have a steady source of income even when the market is volatile. Certainly, you will not want your investments to reflect a poor performance. You might be a seasoned and patient investor but you would not wish to face losses repeatedly.

So, if you do not want to take too many risks, Unit-Linked Insurance Plans ULIPs can be an ideal investment instrument for you. ULIP plans present a variety of funds where you can invest to receive continuous returns. You can include a debt fund in the ULIP to secure your investments when the market is unstable.

Explained ahead are a few noteworthy benefits offered by debt funds.

  • Low charges

One of the reasons why you must invest in a ULIP plan that has a debt fund is that the charges involved in this type of investment are nominal. Therefore, you pay an affordable amount and enjoy stable returns.

  • Low risk

Uncertainty is an unavoidable part of the investment market. So, if you are a risk-averse investor, then debt funds are ideal for you. In case of such a fund, ULIP returns stay stable even when the market is not performing well, which is why many investors are opting for it. These funds offer steady income and tax benefits, which lower the risk of losing money even when the market is down.

One key factor that you need to be careful about while investing in a debt fund under a ULIP is the asset allocation of your ULIP portfolio. With ULIP plans, you have the flexibility to choose the funds where your money will be invested. In addition, they also have a switching feature, which allows you to transfer your money between funds. This way, you can always move the money to best-performing funds and minimize loss. Fund managers help you with this, as they tend to take a low-risk approach when managing funds.

When creating your portfolio, you can always balance the low-risk investment funds that provide stable ULIP returns.

  • Regular returns

Investors, who prefer a debt fund over a high-risk fund, can enjoy a regular source of income. In the case of a debt fund, ULIP returns do not stop even when the investment market is going through a testing time. A debt fund provides you with ULIP returns that help you combat inflation effectively.

So, now that you understand the benefits of a debt fund, you must invest in a ULIP that comes with such a plan to meet your financial goals.

Wish to add stability to your investment portfolio? Get in touch with us and invest in a ULIP offering debt funds. Such an investment plan will provide you with life insurance, stable returns on investment and tax-saving opportunities as per Section 80C and 10 (10D) of the Income Tax Act, 1961.

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Bajaj Finserv Direct Limited ("BFDL"), erstwhile Bajaj Financial Holdings Limited is a registered corporate agent of Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company Limited under the IRDAI composite registration number CA0551 valid till 10-Apr-2021. BFDL also renders services to Bajaj Finance Limited (‘BFL’) and Bajaj Housing Finance Limited (‘BHFL’) (referred hereinafter as ‘Lending Partner’) in sourcing of customers, providing preliminary credit support activities, fulfilment services and post-acquisition customer services related to lending business. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522