Debt Fund is a kind of mutual fund which invests in fixed income securities like gilt funds, treasury bills, bonds, short term plans, monthly income plans, fixed maturity plans, liquid funds and etc. Debt Funds are convenient for short-term or medium-term investments. Short-term investment starts from three months to one year and the medium term starts from three years to five years. Debt funds are like liquid funds for short term investors. Keeping your money on a debt fund is better than keeping your money on a savings bank account. The liquid fund gives 7%-9% returns and also offers the same liquidity for meeting emergency requirements. Debt Funds are like a dynamic bond for medium-term investors. It gives higher returns compared to bank FDâ€™s. The monthly income plans are also a good option if you want to earn regularly from your investment.