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Debt instruments for a longer tenure

Consider FMPs and FDs for fixed returns over long-term when debt funds appear volatile

I want to invest in long-term debt mutual funds. Where should I invest?
-Rohit

Long-term debt funds do well when the interest rates are falling down. These funds have been doing poorly of late with interest rates going up. This has also resulted in high volatility, which has been unnerving for an ordinary investor. Hence, if your timeframe is definite and you know that you will not need the money, you can even consider a fixed deposit. Bank FDs are giving good interests in the current times, but they might not be as tax-efficient. The other option is a fixed maturity plan that will give you better returns and will be tax efficient. FMPs lock-in your money for a fixed period and you can avail the indexation benefit on redemption. Long-term gains from debt funds are subject to either 10 per cent flat tax or 20 per cent with indexation.



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