Debt mutual fund is a semi-secret gem that not many really talks about. Debt mutual funds primarily invest in Debt instruments like government and company bonds, Treasury bills (T-Bills), debentures etc. They hope to generate a fixed income.

If you are like most people, you do not know enough about the economy, nor have the inclination to learn and stay on top of the market. Even if you do, as a retail investor sitting at home with a laptop, information available to you is limited. This is where mutual funds come in. Here is a simplistic picture of how they work.

If you are asking this question, I think you are in the right track. India is a booming economy and there are plenty of opportunities to invest your money. Remember the rule: Only invest in instruments that you understand.