Best Debt investment instrument in 2025!

[Ramakgmc]

Most of us (after 45 years) wish to put around at least 20-25% of the corpus to debt instruments. Considering a 33% tax bracket and long-term goals.
Obviously, 1. The emergency funds are in short-term FD/Debt funds. 2. 1.5 lakhs goes to PPF, and 3. Also, to the Sukanya Samriddhi Yojana, if applicable.
For the rest, what are the best options?
1. FD -
Pros: Easy to open, fixed rates for the tenure, risk-free (most banks).
Cons: Lock-in period, more old-school, Penalty for premature closure, pay tax on gains even if you do not encash, not ideal for very long-term goals (you are tempted to withdraw once in a while)
Expected returns post tax (33% slab, non-senior residents) - 4 - 4.5%
2. Debt MF
Pros: Very transparent, no lock-in, easy to withdraw, no tax is paid until withdrawal, and considered more trendy.
Cons: Returns vary, credit risk, exit load, not ideal for very long-term goals (you are tempted to withdraw once in a while)
Expected returns post tax (33% slab, long-term funds) - 4 - 4.5%
3. Insurance schemes
Pros: Fixed income plans, earlier 7% tax-free guaranteed returns (now 6%), tax-free up to ₹ 5 lakh per PAN, ideal for very long-term investments, as you are locked in.
Cons: The whole (social media) world hates it!, 15-20 years lock-in.
Expected returns post tax (33% slab, non-ULIP) - 6%
Anything else am I missing (for a routine investor)

 

[subham23]

Below 60 years, there are only few options.
As you told PPF (lock-in 15 years) and SSY (lock-in 18 years) gives good fixed interest and tax free maturity.
So only Debt fund makes sense unless you are interested in Gold purchase/investment.
Else alternative to bigger FD is small plot/land purchase (buy/sell/process/follow ups headache)

 

[Ramakgmc]

Below 60 years, there are only few options.
As you told PPF (lock-in 15 years) and SSY (lock-in 18 years) gives good fixed interest and tax free maturity.
So only Debt fund makes sense unless you are interested in Gold purchase/investment.
Else alternative to bigger FD is small plot/land purchase (buy/sell/process/follow ups headache)

I agree, but we must keep gold and real estate as separate asset classes and not club them with debt.

 

[cardio_guycardio_guy is verified member.]

You can put 60L in senior citizen parents name under SCSS. (30L each)
8.2% interest quarterly.

Easiest, simple and best way is debt MF, especially moneymarket or ultra short term funds. Don't go beyond that.

Deferred annuity policies are also OK, if you are paying in parts now and getting it back later. something like Jeevan Umang.

Continue EPF contribuion, bt getting money back from EPF is a nightmare.

If you are investing one shot big amount, Immediate or deferred annuity policies are still fine, like the Jeevan Akshay series (choose from different annuity options based on your need).

 

[cardy]

Continue EPF contribuion, bt getting money back from EPF is a nightmare.

What is the process to get the money, can you explain a bit.

 

[sunit123]

You can put 60L in senior citizen parents name under SCSS. (30L each)
8.2% interest quarterly.

Easiest, simple and best way is debt MF, especially moneymarket or ultra short term funds. Don't go beyond that.

Deferred annuity policies are also OK, if you are paying in parts now and getting it back later. something like Jeevan Umang.

Continue EPF contribuion, bt getting money back from EPF is a nightmare.

If you are investing one shot big amount, Immediate or deferred annuity policies are still fine, like the Jeevan Akshay series (choose from different annuity options based on your need).

Any investment in the name of parents is not advisable unless you are lone child...It will become panchayati paisa...Other legal heirs can claim their stake in this money......

 

[cardio_guycardio_guy is verified member.]

What is the process to get the money, can you explain a bit.

After you have retired from work, go here and place a withdrawal request. https://unifiedportal-mem.epfindia.gov.in/memberinterface/
It is pretty simple there are hundreds of youtube videos explaining the process.

 

[tachniki]

Has anyone looked at private corporate bonds or are there good mutual funds related to them?

 

[tachniki]

Any investment in the name of parents is not advisable unless you are lone child...It will become panchayati paisa...Other legal heirs can claim their stake in this money......

Will totally vouch for this. Have seen mess due to this even with nomination.

 

[tachniki]

Deferred annuity policies are also OK

Haven't come across any good annunity plan. Fixed deposits are usually better than any annunity plan that I have noticed.

 

[Ramakgmc]

Haven't come across any good annunity plan. Fixed deposits are usually better than any annunity plan that I have noticed.

All fixed income plans used to give 7% tax-free returns earlier, and now give 6%. Refer to the IRR in the attached Excel sheet.

 

[Ramakgmc]

By the way, none of my relatives or I are in HDFC or any insurance firm.

 

[Ramakgmc]

Has anyone looked at private corporate bonds or are there good mutual funds related to them?

Are there any good posts or links to details on bonds? What is the taxation and expected returns?

 

[panchabhut]

Insurance is NOT an investment instrument.

For long term goals, best option is NPS. It is a combination of Equity MF, Corporate Debt MF and Govt debt MF, with lowest AMC. And gains from Equity MF can be transferred to Debt MF WITHOUT any tax for just Rs.25 by making allocation percentage switch. The entire gains are tax free, as long as the required percentage is converted to Annuity. So start with high Equity MF share and then gradually reduce equity component and shift more to debt component as you grow older. If your employer is willing to pay are part of CTC as NPS contribution, then that further reduces the overall tax impact.

PS: As someone in 50+ age bracket, my views may not align with the majority.