I’m very new to investment, and finding it very difficult to choose between hundreds of schemes by multiple AMC’s. Can you help me decide whether I should invest in debt funds or equity funds?
So far what I have figured is while debt funds are, in general, low risk investments compared to equity funds. To counter that, it has low returns, which I expected. But also debt funds have higher tax rate up to 3 years of investment, which is making me confused on the expected benefits of choosing these over equity funds.
To give some information about my profile, I’m in late twenties, and I’ll say my risk profile is moderately high. I can invest around 15k per month. I’m investing mainly considering retirement.
Let me know whether my understanding about the differences between debt and equity funds is right or not, and whether it’ll possible to guide me based on the provided information.
Asking for advice on public forums is a bad idea. It might seem like these things are intimidating given the number of funds, but if you spend enough time to learn the basics, it’s not a big deal. I’d highly recommend you spend some time on this Varsity module:
This was (and still is) exactly my mental state while I asked the question. But I see your point, and will go through the link you referred. Thank you.
Since you referred to retirement, do read on NPS - New Pension Scheme. (it has absolutely low cost, asset allocation towards, equity, bonds and gilts plus added advantage of tax benefits)
Another topic you should read is Nifty 50 ETF or Nifty 50 Index fund.
Sure, I’ll read up on this as well. Thanks for the suggestion.
I’m very sorry, but I couldn’t find anything on this. Did you by chance mean National Pension Scheme, the one that offers 50K exemption above 1.5L? If so, so far I’ve avoided this considering very long lock in plus taxable final income, but may be I’ll see the details in case I missed something.
Since u r in twenties & collecting the corpus for retirement, you have ample time in hand. So go for equity than debt. My suggestion is park your excess funds in short term funds and switch it to index fund periodically. According to my knowledge any STCG from debt mutual funds will be clubbed with your income and taxed according to the slabs.