For most Indian investors, the meaning of “fixed income” starts and ends with a bank fixed deposit, that’s the word from Niranjan Avasthi of Edelweiss AMC, who featured on the latest episode of Winvesta Insights – the new season of podcasts from Winvesta.
Avasthi – who heads the product, marketing, and digital business at Edelweiss AMC believes that the scope for retail investors to get into fixed income securities is huge as most of the money invested here so far is from HNIs or Institutional investors.
Avasthi advocates shifting a greater portion of your allocation to fixed income once an individual is nearer to achieving his / her goal. “This will make sure that the corpus that you are building for that particular goal is stable, and is not left to the vagaries of the equity market.”
Here are 10 key takeaways from that interaction:
- No other asset class other than fixed income offers visibility of returns
- There are various kinds of fixed income instruments beyond just conventional fixed deposits
- Gone are the days when Fixed Deposits will have interest rates of 8% or 9% for prolonged periods
- There are two kinds of risks in fixed income: Interest Rate Risk & Credit Risk
- Choosing the right fixed-income fund depends on two factors: Time Horizon & Risk Appetite
- If you don’t match your investment horizon with the right fund, you are bound to see volatile returns
- If you invest in bonds and remain invested till the end of the tenor, you are not impacted by interest rate fluctuations in between
- A larger portion of the money in debt mutual funds in India is from HNIs or Institutions. There is a wide scope for retail investors to get into such an asset class.
- The diversification benefit for overseas investment is more beneficial in equities than in fixed income
- As you come closer to your goal, the allocation to fixed income should increase and equities should reduce
To listen to the entire episode, click here. The Winvesta Insights Podcast is available on multiple platforms like Apple Podcasts, Google Podcasts, Spotify, Anchor, Radio Public, Breaker, among others.