It’s time for women to move from being traditionally conservative investors to a more confident standpoint. Here’s how debt funds can help you achieve your short- and long-term financial goals.

Why should women invest in debt funds?

It has been a long-held notion that men are more aggressive investors compared to women and are more likely to take greater risks when there are higher returns at stake. Research conducted across the world has shown this to be largely true for various reasons. 

First, women have always been paid lower wages on average, leaving them with comparatively less money to invest. Second, studies suggest that a women’s natural maternal instinct results in her being more of a cautious investor. It is important to also note that financial literacy is usually lower in women as compared to men. Additionally, in an Indian context, the male members of the family have traditionally been the ones to handle investment matters. 

However, times are changing. With more and more women occupying positions of power in middle and senior management in the corporate sector, as well as becoming successful entrepreneurs, they are looking for better investment opportunities. Also, with women living longer than men, their expenses are likely to be higher over a period of time, so there’s a need for more strategic investment that bears higher returns. 

Women invest more in conventional instruments like gold, silver, fixed deposits (FDs), recurring deposits (RDs), etc. While these do offer the advantage of stable returns, their return on investment (RoI) is much lower than that of riskier options like the stock market and mutual funds.

If you’re looking for a relatively less risky investment option that still gives you higher returns than FDs, you should definitely consider debt mutual funds. These are a safer option for investment than equity mutual funds. Debt funds invest in money market instruments, such as corporate bonds, government securities, treasury bills, and commercial papers. The fund manager of a debt fund will invest in a variety of securities, based on their respective credit ratings – an indication of the soundness of investment.

Related: What investment options can create a regular income for women? 

Here are 5 reasons why debt funds are a sound investment option for you:

1. Better returns

When it comes to RoI, debt mutual funds may not give you the comparatively higher returns of equity mutual funds, but they can give you a better rate of return than what you would get if you parked your money in FDs. Hence, the best debt funds are a good combination of optimal risk and return. 

2. Investment stability 

Before you put your money into debt mutual funds, you can read all the relevant information in the policy scheme document, including a suggested maturity date and an interest rate that is largely unaffected by market fluctuations. 

3. Freedom of choice

When you invest in debt mutual funds, you have the flexibility to choose your duration of investment as per your financial goals and investment horizon. Durations of debt funds range from 1 day (overnight funds) to 7+ years (commonly known as long duration funds).

Related: Do you know about these cost-effective investment options? 

4. Income tax benefits

If you hold units of a scheme for less than 3 years, your returns are classified as short-term capital gains and are taxed under the income tax slab applicable to you. However, if you have kept your money with the fund for longer than 3 years, your returns are classified as long-term capital gains, and taxed at 20% with indexation benefits. 

5. Easy liquidity

Since you can choose exactly how long you want to invest your money with debt funds, it allows you to strategise your liquidity in advance. However, in case of an emergency, you can always withdraw your money from the scheme, and you will receive it in your bank account within a couple of working days. 

Now that you know just how simple and profitable it is for you to invest in debt mutual funds, it’s time you research the best funds available and take a strategic leap of faith! This article will give you all the information you need to get started. In the meantime, check these 10 Bank loan schemes that are designed for women entrepreneurs.

Disclaimer: This article is intended for general information purposes only and should not be construed as investment or tax or legal advice. You should separately obtain independent advice when making decisions in these areas.


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