With the current economic scenario including the rise in inflation & recession faced by developed economies, India has also taken its free share of damage among the others.
The RBI recently hiked the repo rates which are seen as a measure taken by the government to curb inflation.
However, even with the rise in the repo rate, the market opportunities have not dwindled.
According to Someshwar Srivastava, one such opportunity is found in the Debt securities market, where debt has more value than equity, thanks to the recent changes.
The returns are on the rise as seen in the case of debt markets where the hike has positively impacted some companies who will be passing short-term benefits for fresh inflow for the customers.
Tax Efficiency & Capital Safety, which are the main features of debt, is a positive against equity anyways.
The equity market, on the other hand, will keep facing pressure amidst inflation, war & severe economic conditions.
High Returns in the Debt Market
Since the hike in rates, the IRR of some companies has been increasing & reached a height of 6%. This is the highest return opportunity as the return rates have always been around 4 to 5%.
Fixed Income v/s Fixed Deposits
| | Fixed Income Plan IRR | Fixed Deposit IRR |
| Pre Tax | 8.2% | 6% |
| Post Tax | 6% | 4.02% |
As seen above, fixed incomes provide better returns than FDs.
As a result of the rate hike by RBI, the increase in returns in Fixed Income can be temporary where one can take advantage by investing in Fixed Income Plans & booking the rates for a longer period with a guaranteed & tax-free income.
Why should you invest in the Debt Market now?
- Investment opportunities in the short term
- Guaranteed & Regular Income
- Fixing a higher return rate for a longer-term.
Conclusion
The current economic conditions, shaped by inflation and global uncertainties, have highlighted the resilience and potential of the debt market as a lucrative investment avenue.
As per seasoned investor and veteran Someshwar Srivastava, the debt market is positioned to offer compelling opportunities, thanks to rising returns and its inherent tax efficiency and capital safety.
As repo rates climb, fixed income plans now deliver higher Internal Rate of Return (IRR) compared to traditional fixed deposits, making them an attractive choice for investors seeking stability and better post-tax returns.
Additionally, the temporary nature of these increased returns presents a unique chance for investors to lock in higher rates and secure guaranteed income over the long term.
Veteran Someshwar Srivastava feels for those looking to navigate the turbulent equity market and safeguard their capital amidst economic challenges, the debt market offers a promising solution.
With its blend of steady income, tax advantages, and peak IRR, now is the ideal time to capitalize on its opportunities.