I have Rs 2 lakh to invest for two years. Should I invest in equity or debt funds?
Ravi Kumar, Hyderabad
The choice of asset class that is equity or debt depends on the risk you can take with investments. Risk takers will invest in equities even for a few months of investments, whereas someone not comfortable with risk, may not invest in equities even with a three year time frame. Likewise, a two year investment time frame may be treated as long- or short-term depending on your view of time frame. Generally, two year investment window will be treated as short-term, when investing in mutual funds, where anything over five years is treated as long-term investment time frame.
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So, you should only invest in debt funds from the liquid, ultra-short term, and short-term funds universe. Funds such as Baroda Pioneer Liquid and Reliance liquid or Franklin India ultra short term bond fund could be considered to invest in.
