Gone are those 8% days.
Then look further than ultra short term funds or money market funds.
As this is debt, if you have money, you can invest at once, of course after choosing an appropriate fund.
By better you mean better returns, know how arbitrage works, there have to be arbitrage opportunities for the funds to get returns.
Depends. It depends on your tax slab, way of withdrawal, need etc.
Gilts are very volatile, not recommended.
Overnight, so obviously the returns are always the lowest.
I think credit risk funds, but as the name is self explanatory, there is a chance of capital loss too.
As you want to invest for more than 3 years, the hikes and cuts have no significant impact, so invest as per your need and plan.
You can if you want to, you can check every month.
Debt funds although are straight and simple, and are stable compared to equity. They do come with credit risk, and interest rate risks. A credit downgrade makes a bond less valued when it changes hands, when it trades, and a default obviously means capital loss, unless and until the defaulter pays back. Interest rate hike or cut effects all bond funds, but the lesser the maturity of the bond, the lesser will be the impact, hence it is suggested to go with UST or MM funds even for a few years of investment. There is one other possible risk, happened in the past, redemption risk, so to speak, when for any reason investors want to redeem, just like panic selling in equity markets, there could be a withdrawal limit, even temporary halt for redemption, as the bonds have to be sold and cash is generated.
All reputed fund houses more or loss invests in the same kind of bonds, from the same companies too to some extent, so go with reputed fund houses, ones which you are comfortable with, check the AUM, check the number of bonds too, check their ratings, and take a decision.
But remember, there is a chance of loss that could come from any bond, to mitigate this, you can to constantly check the ratings of each bond in the PF, and if a bond is downgraded, check its weight in the PF, know about the issuer, and decide if you want to stay or exit if you expect a further downgrade or a default.
