Selection of debt mutual fund or equity mutual fund ?

POSTED BY devanshnigotia ON November 28, 2014 9:43 am COMMENTS (3)

I am stuck in a very confusing situation, i.e whether to invest in debt mutual fund or equity mutual fund ?

following assertions have raised my doubts:-

-Currently(as on 26th November 2014), markets seems to be a bit overvalued(p/e ratio of sensex being 18.4 and Nifty 21.4)

-In debt mutual fund , whether directly or indirectly, tax will be charged on interest earned by the mutual fund every year ?

-Having the age of 19 years, my risk taking capacity is very high and I want to stay invested for a long period of time (more than 7 years)

Please help me solve my problem with reasons

3 replies on this article “Selection of debt mutual fund or equity mutual fund ?”

  1. devanshnigotia says:

    thanks a lot for your valuable suggestions. @Rahul @ashish

  2. Ashish Garg says:

    Adding to what is suggested by Rahul above:

    Since you are 19, ready to take risk and also looking at a long term horizon, why to worry about the overvalued market. Just research and go for an equity oriented fund, a bluechip fund.

    If you are thinking that markets are overvalued you should invest now, then do you really know when the market will be down and to what level, I am sure you don’t. So just go the SIP way and continue investing for long term.


  3. RahulMalhotra says:


    Your doubts are almost valid. The solution lies more in research (reading more about mutual funds and how to invest in them) rather than the responses here. Please consider our responses as a pointer not the confirmation.

    1. Do you know ‘how’ we invest, or put our money, into mutual funds ? Try to reach various documents/website pages/articles about it. You might come across a term SIP (systematic investment plan), try to read about it for a couple of days or a couple of weeks. Keep reading and researching via many articles available on internet for next two weeks. This should answer your first query about market overvalued etc.

    2. For debt mutual funds too, you’ll need to read a lot of articles. Please try, for next couple of weeks. It’s not just about tax.

    3. You’re 19, it is good and surprising to see you in the field of mutual funds or on a website like jagoinvestor. A good sign that someone is trying to improve his/her awareness and habit to save/invest the money. Answer to your third query/point lies in the point 1st itself. When you read more about MFs, you’ll come across the following terms and all these will help you MORE and MORE to analyze and then get back to us/anybody for further discussion:

    Large cap mutual funds
    Mid & Small cap mutual funds
    Tax saving ELSS mutual funds
    Balanced mutual funds
    Low risk, medium risk, high risk
    Short term, Long term investment
    Liquidity of money, Locked money
    SIP concept of investment, Lump sum investment.
    Regular fund investment, DIRECT fund investment.

    This is how I ‘started’ my investment into mutual funds. I am not very experienced in this field yet though. More experienced investors should be able to help you more here.

    Thank you, keep your research ON and keep asking questions!

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.