An impasse over carriage rights fees may result in a blackout of Comcast SportsNet Chicago for Dish Network subscribers beginning next month, potentially cutting off Chicago Bulls and Blackh...
Treasury bills are zero-coupon securities (do not pay interest) and are issued at discount to face value. The discount on the face value constitutes the return for the lender/investor. No risk of default. Commercial Paper (CPs): An unsecured money market instrument issued by corporates and financial institutions for maturity ranging from 7 days to up to 1 year. Issued at discount to face value. CPs are used to raise short term resources or to meet working capital needs. Since the debt is unsecured, the odds are low that a borrower with low credit rating will be able to raise funds through commercial paper. Minimum credit rating of "A3" for the CP (A1 is the best. A4 and D are the worst) Certificate of Deposit (CDs): Can Be issued by banks and permitted financial institutions. The tenure for CDs issued by bank ranges from 7 days to 1 year. The tenure for CDs issued by other financial institutions ranges from 1 year to 3 year. Non-convertible debentures of original maturity or initial maturity up to 1 year: Can up issued with maturity ranging from 90 days to 1 year.
All mutual funds have some level of risk. Generally, the higher the risk, the higher the return. And the reverse is also true. Mutual funds allow you to pool your money with other investors, allowing you to easily invest in companies with higher share prices. Plus, mutual funds tend to be diverse and often have low levels of risk. However, there is still some risk, and you don't have control over the investments. Be mindful of your fees, and try to keep them as low as possible. High fees can eat away at your returns. Above all, don't wait to start investing. If you need a good way to start a brokerage account or IRA, give the M1 Finance app a try.
However, for the fund categories that carry low-interest rate risk, SEBI does not limit the level of credit risk these funds can take. For instance, some of the ultra-short or low duration debt funds with the best star ratings invest in low-quality debt. Lower quality debt offers a higher return (with higher risk). Higher returns help such funds maintain star status. Now, for an investor looking for a fund (outside of liquid and overnight funds) with low interest rate risk, this is an issue. By the way, there is nothing wrong in taking credit risk so long as you are aware of the risks involved. Among all the confusion, Money market funds may be a slight exception. Money market funds have an explicit limitation on interest rate risk (portfolio duration) and an implicit limitation on the credit quality of the portfolio (believe only good companies will be able to access money markets). Therefore, for investors looking to invest in funds with low-interest rate and credit risk, money market funds may be a good choice.