If the choice is between Gilt Funds Vs Bank Fixed Deposits, then which one is best and safe? What are the risks in Gilt Funds and Bank Fixed Deposits?
Currently, the 10-year Government of India’s Bond Yield is hovering around 7% and many Banks offer around 7% interest rate for 10-year Fixed Deposits. Hence, obliviously the question mark in many investors’ minds is which one to choose. Let us try to discuss this aspect.
Gilt Funds Vs Bank Fixed Deposits – Which is best?
There are various risks when it comes to Gilt Funds or even Bank Fixed Deposits. Hence, let us try to understand them one by one in detail.
1) Credit Risk
Let us try to understand the nature of Gilt Funds. As per the definition, they have to invest around 80% of your money into Government Of India Bonds. Rest 20% is left with the fund manager to choose. It is your responsibility to check where the fund manager is investing the remaining 20% of the portfolio.
This rule applies to both…