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 repo rate, the market opportunities have not dwindled. 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 are providing with better returns than FDs.
As a result of the rate hike by RBI, the increase of 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?
- Tax Benefit
- IRR at peak
- Investment opportunities in the short term
- Guaranteed & Regular Income
- Fixing a higher return rate for a longer-term.