InvestorQ : Do I continue to invest in Debt funds after no rate cut by the RBI?
Gayatri Surendran made post

Do I continue to invest in Debt funds after no rate cut by the RBI?

varsha Motwani answered.
2 years ago
A debt mutual fund means a debt instrument that invests in fixed-interest generating securities like corporate bonds, treasury bills, Government securities, commercial papers, and other money market instruments. One important reason for investment in debt funds is to earn interest income on the said investment and simultaneously appreciating the initial investment.

As we are aware that the Reserve Bank of India (RBI), in its latest policy, has made no changes in the repo rates, this will not have a great impact on investment in debt instruments. No change means that the borrowers can borrow at the same rate they were borrowing earlier.
You can decide the tenure of your investment and then select the fund accordingly. For example, if you have a time horizon of 3-6 months you can opt for Liquid mutual funds. If you want to stay invested for a term of at least 3-5 years you can consider dynamic bond funds. However, if you are thinking of long term funds you can opt for funds with better returns and a higher maturity period.

You can also build a portfolio consisting of funds ranging from highly liquid to those with a higher maturity period. You can invest some portion in highly liquid funds to meet your emergency expense, some portion in small-mid ranging funds so as to meet your short-term goals and a significant portion in high-maturity funds to meet out your long term objectives.