I am being advised to go in for a debt fund instead of an FD. Should I go for this?

Mahesh Lalwani, Delhi

The comfort of putting money in FDs is that one understands the returns they are going to earn at the end of the tenure. In case of a debt fund, you do not have this guaranteed interest earnings. However, compared to FDs, debt funds are tax efficient and also have the potential to earn more. Do not jump into the debt fund if you have never invested in one so far. Start by small contributions to these, even as you retain your FDs to experience them. May be after a year or so, once you have understood and experienced the way debt funds function and there is an element of comfort in making such a move; you could consider using these as alternates to bank FDs.

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