Debt instruments: What are they and when to invest in them?

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Debt instruments: What are they and when to invest in them?
Investment in debt instruments is normally preferred by conservative investors, but in uncertain economic conditions, aggressive investors too shift their portfolio focus towards debt instruments. Let's discuss the types, features and suitability of debt instruments from investor's perspective.

Also read what are the best debt options in India?

So what is Debt Investment?

It's an investment option which has following characteristics:
A fixed rate of return
A fixed maturity period
Low Risk Low Return
Low to high liquidity

Some of the debt instruments are

Fixed Deposits
Debt Mutual Funds
Bonds and Debentures
Government managed saving schemes (NSC, KVP, PPF)

When is the right time to invest?

Correct time to park your money in debt instruments is at the peak of the interest rate cycle. We all know inflation is beyond control and RBI is trying to tame it by employing various measures. Interest rates went up slowly since last one year as the RBI was tightening the monetary policy. But, in recent past, RBI has changed its stance and started reducing interest rates. So, we are somewhere near the peak interest rate scenario and hence investors should start planning for investment in debt instruments for better returns.

About the Author:
The author Bimlesh Singh is a financial advisor. He holds a Bachelor's degree from IIT and is a CFA Level 2 candidate. He can be reached at


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