SIP Investment In Debt Mutual Funds Is Good For Defensive Investors

SIP investment has become really popular because it allows us to manage investment risk easily. Investors get attracted towards equity linked investment plans. The reason for this attraction towards equity is because of possibility to earn high returns. In order to balance between risk and return, SIP is one of the best investment tools.Let us see SIP in debt mutual funds. Debt linked mutual funds already represent risk free form of investing. Hence, SIP in debt mutual fund is considered a good investment decision.For defensive investors, starting SIP in debt mutual funds is really good. Debt linked investing is already a defensive form of investing. When we add SIP to debt-investing, it becomes more systematic. Instead of putting all money at a time, SIP asks investors to spread it into a wider horizon. When it comes to equity linked investors, spreading investment over a period of time gives benefit of rupee cost averaging. Returns of equity linked investments are very volatile hence rupee cost averaging works well there.

For long term wealth creation, I feel SIP in debt mutual funds can be a great investment vehicle. Though debt funds gives comparatively lower returns than equity linked plans, but SIP in debt funds can prove very inspiring. As I said earlier, for a defensive investor there is nothing more inspirational than seeing their corpus grow each month. But I would like to make a point here first. Returns from debt mutual funds cannot beat inflation. So if one decides to start SIP in debt mutual funds instead of equity, it is like an opportunity loss. In long term, equity plans are preferred because it can beat inflation. There is no doubt that long term return from equity is superior to debt mutual funds. But if investors’ psychology is defensive, negative effect of inflation is not a main investment criteria. For defensive   investors,  building a 'continuously growing wealth' more important than 'fast compounding of money'.

Official website:-