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What are the best debt options In India?

What are the best debt options in India?
Investment in debt instruments would depend on the individuals ability to take risk and his investment time horizon.

For investors with moderate risk appetite and short term investment horizon

Investment in Debt Funds, FD's, and Tax Free Bonds are good options for investors with short to medium term investment horizon. Debt funds invest in various types of debt securities and are professionally managed. Most of the debt funds are highly liquid, so money can be parked in them for short term. Once the economic condition improves and interest rate eases, this money can be reallocated towards equities. If you as an investor simply want to sit and enjoy life till normalcy in market returns, then medium term FD can be very good option for you as the return on them is compelling. If you want to enjoy regular income together with security, then you can go for tax free bonds which make regular coupon payments and the principal is paid back at maturity of the bond.

Also read 4 reasons to invest in debt funds

Investment in Government managed saving schemes (NSC, etc) are a strict no for the time being as upcoming DTC proposes to remove them from the categories of exempt income.

For investors with low risk appetite and long term investment horizon

As per new DTC which is expected to be implemented from 2014, PPF investments will be governed by EEE (Exempt, Exempt, Exempt) and not EET (Exempt, Exempt, Taxable) meaning, investment, accumulation and withdrawal all three related to this investment will be tax exempt. So, investment in PPF is recommended if DTC implements this rule post 2014. Investment in PPF also acts as a tax saving instrument which adds to the overall return on investment.

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

Read more about: nsc ppf debt instruments
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