SIP investment

Why You Need a Financial Advisor to Choose Right Debt Funds?

Insurance

Last Updated on 21/02/2019 by Deepak Singla

Investors nowadays give utmost preference to equity mutual funds schemes than debt funds when they ask to pick a fund to invest because equity funds gives higher return than debt schemes. However, investment is debt schemes are much secure but sometime choosing the wrong funds not suitable to investor portfolio might cause some misleading.

When you invest your money in debt funds schemes either for a short term or for a long term financial objective, selection of a wrong fund or fund of inappropriate category have a negative impact on your portfolio. The best way to avoid such risky conditions when you invest in a debt fund is to seek professional financial advisor assistance in order to choose the right debt fund suitable to your portfolio andrisk profile.

Benefits of Hiring Fund Advisor to Choose Debt Funds

Following are the reasons of seeking a professional financial planner guidance tochoose a debt fund:

Protects You From Misleading:

In the Indian context, there are some debt funds that may mislead some investors on the basis of its name to a new investor. For example: In ‘ICICI Prudential Ultra Short Term’ plan the tag “ultra short term” signifies it as a short term scheme with low returns. But in actual, this funds delivers significantly higher returns than funds belonging to ‘ultra short term’ category after completing an average maturity period of 2.5 years. But, if you invest it for only 3-6 months duration then it will enhance your risk as this schemes usually needs a minimum 2 years maturity period to deliver high returns to the investor. When you hire a fund advisor for choosing debt, he with his experience will clarify all the aspects of a scheme which is misleading you by its name or category.

Clear varying behavior of different categories:

Mutual funds scheme of different categories to have varying behavior. Behavior of long term dynamic bond funds is totally opposite to behavior of liquid fund or ultra short term fund. IF you need money in a next few month, your fund manager will not suggest you to invest in high risk funds like dynamic bond funds because it will deliver negative returns to your portfolio over 1-3 months time frame. When you prefer short term or credit opportunity categories for investment purpose, you’ll have to pick a fund which is not only a good performer in the market but also you have to follow a single dedicated strategy to maximize your returns over investment.

Help to choose the best as per your risk profile

Investors with varying risk profile needs a varying but a master strategy to choose the right debt fund and its category. An experienced financial planner always helps investors to choose the right debt fund as per his or her risk profile. If investor wants to attain higher returns in a long term then he can go for debt fund with AAA rating or fund below it. But such returns come with enhanced risk and in many occasions, it generates a negative returns but for a short time period.

Helps in accomplishing financial goals:

A good financial planner always gives best efforts in defining as well as achieving your financial goals. For investors having high risk taking ability, he plays a vital role in managing the investor’s super and tax refunds by investing them with an appropriate strategy. HE with his smart investment approach helps you to invest and save your hard earned money even in tough financial situations.

Clear debts and Manages Cash Flows

A good financial planner while suggesting you the best debt funds also makes a strategy to properly managing your cash flows by clearing your debts. He encourage the investor to plan for future goals like retirement, child marriage etc by creating a pathway for you to reach there. With a strong financial planning approach a good financial planner with his skills and expertise, offers a pathway to arrange your personal finances in a better way. He ensures that his planning would provide peace of satisfaction to the investor. As diversification of a portfolio is related to spreading of risk therefore, a strategic planner always remain prepare to bear all risk factors including risk of concentration in same category of funds, concentration in an asset class and concentration associated with investment style.

Conclusion

Investment in debt funds requires a thorough research & proper guidance by a professional fund manager. While choosing the financial advisor for your financial goal, as an investor you should give preference to an investor having right skills and expertise to manage personal finances. Swaraj Wealth is a leading financial service provider in India whose qualified research teams do best of their abilities for qualitative assessments and quantitative measures of different debt funds. Its experienced team helps investors to take the best investment decision after studying their risk profile and financial objective. To know more about debt funds investment, please contact Swaraj Wealth supporting team now!

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