Which debt mutual fund can be a good alternative to savings bank account

I have a query related to lump sum investment in debt funds. Per many articles by investment experts, it appears that liquid or money market funds are one of the best alternatives to invest your extra money when compared to savings bank account to get higher returns. With that thought in mind, I am thinking to use the debt fund way to invest 5 lacs for a tenure of 6 months to 1 year, the duration could be even longer as well. Below is my strategy - 2 lacs in Money Market Fund or Liquid Fund (ABSL Money Manager Growth or Reliance Liquid Fund) 1.5 lacs in Medium to Long duration Debt Fund (Reliance Income Growth Plan) 1.5 lacs in Gilt or Corporate bond Fund (SBI Magnum Gilt Fund) Rather than keeping the entire 5 lacs in a liquid fund, would it be wise to use the above strategy to diverse my investment? Please advise?

Jul 22, 2019 by Mrinmoy Bhattacharya, Bangalore | Mutual Fund

You have read it right - Liquid and/or Money market mutual funds are good alternative for parking your investible surpluses in place of savings bank account. You can add Arbitrage Funds and Overnight Funds also in the list. Please read more about these funds from the links provided below -

https://www.advisorkhoj.com/itimf...

https://www.advisorkhoj.com/licmf...

https://www.advisorkhoj.com/iciciprumf...

https://www.advisorkhoj.com/yesmf...

However, please note that medium to long duration debt funds, Gilt Funds, Corporate Bond Funds are not wise investment choices in parking your surpluses for short term period or for a period which you are not sure off. However, if your investment horizon is higher then considering some of these funds could be a good idea. Example, for different time periods, following could be a good guideline for investing in different category of debt funds -

3-6 Months - Ultra Short Duration Funds

6-12 Months - Low Duration Funds

1-3 Years - Short Duration Funds

3-4 Years - Medium Duration Funds

4-7 Years - Medium to Long Duration Funds

Great funds are ideal investments if you are looking for alternatives of bank savings accounts and FDs - Please read this to understand more - https://www.advisorkhoj.com/edelweissmf...

And to select most consistent performing funds from any mutual fund category, do refer to this link - https://www.advisorkhoj.com/mutual-funds-research... - Select the category of funds you are looking to invest in and see the results.

Hope the above helps you in your investments in debt mutual funds.

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