What each does for you
Equity (stocks, equity mutual funds) gives you growth - historically 10–13% over long horizons in India - but with bumpy years along the way.
Debt (FDs, debt funds, bonds, PPF) gives you stability - 6–8% returns with little drama. It's there to keep your portfolio steady when equity has a bad year.
A simple allocation rule
Subtract your age from 100. The result is roughly the % of your portfolio that should be in equity. So a 30-year-old: 70% equity, 30% debt. A 55-year-old: 45% equity, 55% debt.
It's a starting heuristic - adjust for risk tolerance, goals and how long until you'll need the money. The closer the goal, the more debt.
Rebalancing keeps it honest
Once a year, check the split. If equity has run up and is now 80% instead of 70%, sell some and move it to debt. Sounds counter-intuitive but it's how disciplined investors lock in gains.
- Use the '100 minus age' rule as your default split.
- Goals under 3 years away - keep the money in debt, no exceptions.
- Rebalance once a year, not on every market headline.
Frequently asked questions
Continue reading
The power of compounding, explained simply
Why ₹10,000 a month for 20 years can mean more than ₹1 crore - without you doing anything special.
ReadInvesting · 4 minSIP vs lumpsum: which actually wins?
There's a clear answer most of the time - and a smart way to combine both.
ReadInvesting · 3 minStep-up SIPs: the upgrade that changes everything
A simple tweak that can grow your final corpus by 50–80% with minimal extra discipline.
Read