WHAT IS BOND AND HOW TO INVEST IN DEBT FUND?



WHAT IS BOND AND HOW TO INVEST IN DEBT FUND?
WHAT IS BOND AND HOW TO INVEST IN DEBT FUND? 


Table of Contents

* What are Bond ?
* What is Debt fund ?
* Biggest Mantra .
    • BOND ( BOND) WHAT?
Most buses, Bond, represent debt obligations - and therefore there is a form of lending. If a company issues a bond, then the money they receive in return is a loan, and it should be paid on time.

Like the mortgage on the payment of a home or credit card, the payment of Bond also completes the periodic interest to pay the lenders. Buyers of Bond, then are essentially lender.

For example, if you have ever bought a government bond, then the central government has become your debtor.

A bond is like a certificate of deposit which is issued to the lender by the borrower. Even individual investors do something similar when they make fixed deposits in the bank.

When you make a fixed deposit with the bank, you basically lend money to the bank. You can also buy Bond, for example tax-exempt bonds issued by various companies such as REC (IRC) and HUDCO (Bond).

DEBT ( DEBT) WHAT FUNDS ?

Bond is called Debt in market language, it is only one thing and you do not get confused with it.
Debt Fund is a type of mutual fund that creates returns from its investors' money by investing in various types of bonds or deposits.

These words basically mean they lend money and earn interest on the money they have lent. The interest they make is the basis of returns for the investors.

One simple way to understand Debt funds is to think of them as a way to go through interest income, which they get from bonds they have invested. There are some complications ahead of this.
  • Unlike FD , the individuals who invest, mutual funds invest in bonds that are tradable, such as stocks are tradable. The way in which a stock market is where the business of shares is done, there is also a Bond market where different types of bonds are traded.                                             
  • Two, on this loan market, the prices of various bonds may increase or fall as they do on the stock exchanges.                                                                                                                                                                                                                                                                                          If a mutual fund buys a bond and its value increases later, then it can make the surplus money more than the additional interest and income. This will give investors more benefits but obviously, the opposite is also true.                                                                                                                              
  • But why will bond prices rise or fall? There can be several reasons for this. There is a change in key interest rates, or there is hope for such changes.                                                                                                                                                                                                                         Let's say that there is a bond which pays interest at 9 per cent per annum. Then, interest rates fall in the economy and new bonds start getting at 8%.                                                                                                                                                                                                                    Obviously, the price of old bonds should now be higher than ever. After all, investment in the amount given in it can earn more money, so its price will increase now.                                                                                                               
  • Mutual funds that hold it, their holding will be of higher value and they can earn extra profit by selling this bond. When interest rates increase, then there may be reverse.                                                                                                                                                                                            Despite the expectation of security, such a situation  can actually cause some damage to the Bond fund.
Well, we have understood that what is the debt fund and to invest in it you just have to trust the fund manager and you can earn good returns.

But how to invest in such debt (debt) funds?

It is very easy, first study what you want to invest in the debt fund and if it is beyond your understanding then you can also go to a consultant.

The rest of the process is equal to investing in Equity Fund and you will get all the benefits like no other people and no other facility to sell.

It is possible to make SIP even in the debt fund and most of the benefits of equity funds will be available here as well.

BIGGEST MANTRA


The risk in Debt Fund is low because they work with a loan guarantee. Since the risk from equity is low, the return here will also be lower and the risk of return above 10% is less meaningless at lower risk.

thanks for the time .

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