GILT FUNDS – SECURED INVESTMENTS, STABLE RETURNS

Gilt funds are government or state securities generating fixed interests. In simple terms, these are mutual funds that let you invest in government bonds and securities.

Gilt funds are issued by the government whenever the RBI raises the funds for government. Any kind of funds requested by the government from the RBI, RBI issues government securities which is subscribed by the gilt fund manager. Once these funds get mature, the gilt fund returns the securities and provides money in return.

How are gilt funds better?

Since gilt funds invest in government securities, they are low at risk, preserve capital and give moderate returns.

The asset quality compared to other funds is better though the returns might be lower as compared to other funds.

Unlike bond funds they do not allocate to corporate bonds.

How to invest in gilt funds?

Investing in gilt funds is easy once you decide where and through whom you want to make the investment. Log in with your personal details, choose the amount and tenure of your investment, get your KYC and you can enter the market, explore and invest. Estimate the earnings and study the market for the well performing government securities and invest wisely.

Be a smart investor by considering these things

Before making any investment, what haunts the most is the risk. With gilt funds the fear is less since they are government bond and securities that may not decline as corporate bonds, though the net value decreases and rate of interest increases with the fluctuation in the market.

Returns is another thing that an investor is excited and at the same time worried about. Returns are highly dependent on interest rates. Investment in gilt funds should be done when the rates are low. The returns have been quite high when the overall economy is falling.

Cost of investment in gift funds have several components. The annual fee for the fund holds the fund manager’s fee and other costs. Costs vary depending on the activity or investment strategy of the fund manager. Selling and buying requires more time of the manager and may be charged accordingly.

Investment plan for 3-5 years is recommendable for investment in guilt funds as that is the average maturity of the fund. Have an organized investment plan if you think of investing in gilt funds.

If Financial goals is not high, then it can be covered with the gilt fund returns but if you look for more stability then gilt funds are a good choice.

Remember that the capital gains earned on gilt funds is taxable. The rate depends on your holding period.

If market study is not your cup of tea, take a financial advice and manage your investments to suffer later. Happy investing!