ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Mutual fund investment for NRI - Investing in Debt Funds Vs Fixed Deposits

Updated on July 13, 2011

Whether you are a resident of India or a non resident Indian (NRI), debt mutual fund investment is always better than investing in NRE or NRO fixed deposit for you because of following reasons:

  • India is a developing country and there are more benefits of investing money in mutual funds of a developing country than mutual funds of developed country.
  • Debt mutual funds performance depends on interest rate movements and credit ratings of the bonds the funds invested in. A bank fixed deposit is insulated from these things.
  • Debt mutual funds also invest in fixed deposits, government bonds, corporate bonds, etc.
  • Debt funds do not have a lock in period unless it is a fixed maturity plan.
  • Fixed Deposits have lock in period. Your money will be locked for a specified period of time and if you redeem it before maturity, you will get a discounted rate of return whereas in debt mutual funds you can get in and get out any time, except fixed maturity plans (FMP).
  • There is no entry load and no exit load in most debt funds.
  • The return of debt funds also is not bad than the fixed deposits even after deducting the tax.
  • The risk associated with debt fund is very less.
  • The average return per year at present is 7 to 7.75 percent and after tax, it would be around 6 percent.
  • If you keep money idle in your bank account even for a week, it will give you lesser return of around 2.85 to 3.5 percent per annum, so it is wiser to keep your money in liquid funds which can get you 7 to 7.5 percent per annum, so it is better keep investing money in liquid funds.
  • You can have capital gains in debt mutual fund if net asset value (NAV) rises, but that would not happen with a fixed deposit.


One disadvantage of debt funds over fixed deposits is that you can lose money in a debt mutual fund if (NAV) net asset value falls, but that would not happen with a fixed deposit.

Question: What is meant by minimum balance of debt fund? I was browsing through some debt fund details when I came across this:

  1. Minimum Investment: 10000 INR
  2. Subsequent Investment: 10000 INR
  3. Minimum Withdrawal: 10000 INR
  4. Minimum Balance: 30000 INR

Answer: I do not think there is a minimum balance in debt funds, but minimum investment is 5000 to 10000 depending on which mutual fund you are going to buy.

Best of luck for debt mutual fund investment in India


    0 of 8192 characters used
    Post Comment
    • profile image


      4 years ago

      Mutual funds are very necessary for your future. Its a small collective amount invest for you future which gives you large return. Even deposit money monthly is rational but benefits would be not high. Reap benefits depend upon your investment and bank fund rates.

    • soni2006 profile imageAUTHOR

      Rajinder Soni 

      8 years ago from New Delhi, India

      Thanks a lot Kevin. Sameer, and hmrjmr1 for your comments.

    • Hmrjmr1 profile image


      8 years ago from Georgia, USA

      Good Info Soni!

    • sameerk profile image


      8 years ago from India

      thank u for info

    • Kevin Peter profile image

      Kevin Peter 

      8 years ago from Global Citizen

      Gold ,share and real estate are best options for investors


    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

    Show Details
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)