Plan your debt investment strategy

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The interest rate cycle is about to reverse. It may only be a matter of time when you start to see some format of rate tightening or rate hike in India as well. As an investor, what does this mean when looking at the bond part of your portfolio? Either way, term deposits (FDs) have brought in very little return and many retail investors are wondering what else they can do to get past the old FD? There are enough options on the market, the question is which one fits your needs. Mohit Gang, CEO and co-founder of Moneyfront discussed this in more detail.

“The debt market itself and fixed income investors have a lot to do. The turnaround in the rate cycle is a question of “when” and not a question of “if”. , given the strength on the consumption side of the economy, the Reserve Bank of India (RBI) has sent these signals. the system gradually in a systematic and calibrated manner. So the rate cycle will turn, ”he said.

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“The real interest rate in the economy has been negative for quite a long time now. The repo rate has been set at 4% since May 2020 and this is a very long break at the lowest rate – in this scenario all fixed income instruments have been clawed back in that band of around 5 at 6% and to find something that gives you or brings you more than inflation has been a real battle for investors not only in India but all over the world, that is the scenario, ”he said. Explain.

According to him, FD does not beat the inflation figures and therefore does not deliver any positive results there.

“So there is no reason for someone to be in a fixed repository, unless it is an extremely urgent corpus or an extreme security corpus. Apart from this, there are several instruments available in the market. There are a lot of NTMs, bonds and debentures that keep popping up. These are papers specific to issuers, ”he explained.

For the full interview, watch the accompanying video.


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