If you are looking to earn a hefty profit from your savings, mutual funds are the right option for you. However, in the case of most mutual funds, you have to redeem the units to access your returns. For people looking for a steady stream of money on a regular basis, this method does not work.
This is where fixed income mutual funds come in. In these funds, you will receive regular payouts from your investments. Even though the returns are not constant, the duration at which you receive them is fixed. You can choose between monthly, quarterly, and half-yearly payment periods. Here is a detailed look at the benefits of investing in fixed income funds.
- Principal remains stabilized
In other forms of investments, you may end up losing the principal amount, if the market underperforms. However, with fixed income mutual funds, you can rest easy knowing that you will recover the principal after a specified number of days. Furthermore, with secure schemes, such as government securities, the risk is further minimized.
- A steady source of income
These funds can supplement your paycheck. Even though the amount varies in each payment cycle based on the performance of the mutual fund, investors are guaranteed regular payouts. This is greatly helpful as you do not have to wait years in order to reap the benefits of the investment scheme. Furthermore, the money earned after regular intervals can be put to use in other investment schemes, to further increase the wealth over time.
- Diversified portfolio
Investments in fixed income funds will balance out your investment portfolio. This is because your investment is divided between equity and debt instruments. Therefore, you will earn more because of the equity investments, while the risks will be balanced by the debt schemes. This diversified profile guarantees good returns without compromising on the security of the overall investment portfolio.
The reasons mentioned above shows that fixed income mutual funds are quite attractive, due to the constant returns they offer over time. Furthermore, with these schemes, you are more likely to end up with a solid investment base that is a perfect blend of low risk and high profit.
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