It is always wise to keep some portion of your assets in debt funds and never
sport an all-equity portfolio.
With rates set to rise, there is no point in taking any interest rate risk right now.
Avoid long-term duration funds.
Investors should now consider short-term bond funds.
Consider long-term debt funds when interest rates are at a high or have
peaked.
When interest rates do rise next year, more fund houses will come out with
Fixed Maturity Plans (FMPs), which can also be considered.
2010 will be far more volatile for the debt market than 2009 was. The RBI will
start with a CRR hike before moving on to a rate hike.
Courtesy: Mutual fund Insight Magazine Nov. Issue
Regards,
Wadia
Dear wadia,
Is it proper to consider your PF/PPF/Super-annuation as a debt investment along with FD`s & debt funds when you calculate the net portfolio exposure to debt? After all these increase at similar rates and their underlying assets are debt.
Regards
Dear Rdadhe, PF, PPF & superannuation corpus along with ur normal FDs & debt funds all form the debt part of ur portfolio. Even one may consider the traditional life insurance policies under debt category.
Yes ur observation is correct that in all the above investments the underlying assets are debt.
I was just wondering. It make a long term sense to max your PPF each year. Along with PF & Superannuation, it is the only tax free investment avaliable at the moment. (not sure for how long)
After this, normally working people find it very difficult to find large amount of cash to save in other avenues. Is it not therefore best to focus on a % split between Debt & Equity for your age and profile and then allocate the investible cash accordingly? Mostly, this will mean that major portion of your disposable income should go in equity related investments.
Regards
Yes, as dear Ashal pointed out, these are all debt like investments and should be clubbed together with other market linked debt instruments.
Regards,
Wadia
Dear Rdadhe, Yes PPF & PF r the only debt products which r tax free as per current Tax law. But once the new Direct Tax code `ll take place, the things `ll not remain same.
Now to answer how much one should invest in these debt products & how much in Eq. the answer `ll depend upon several factors -
1. Age of investor
2. Risk appetite
3. current portfolio structure
4. Time remain to retirement
5. Financial liabilities
6. Over all time available for investment to grow
To name a few.
After identifying the above & some other factors an investor may decide her own split of Eq. & debt.
| NIFTY 
