Societies and trusts often accumulate Surplus Funds, investing them primarily in Fixed Deposits and similar fixed-income products. However, opting for Debt Investment products can offer more than just fixed interest income; they can also generate Capital Appreciation, potentially providing Higher returns for Investors. This presents a significant advantage.
Interest rates were at their peak around 2020 amidst Market uncertainty, resulting in favorable investment returns for both types of products. As rates subsequently decreased, Debt Investment products saw gains in Capital value, offsetting the loss in interest income. In contrast, Fixed Deposits only returned the principal amount, failing to benefit from Capital Appreciation. This distinction underscores a notable difference between the two Investment options.
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