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Which type of equity fund should a novice invest in?

Dhirendra Kumar sheds light on the investment options for a first-time equity investor

I'm now 20 and pursuing my CA. I'm currently investing Rs 1500 per month in a bond fund and now want to move towards the equity side? Would it be suitable for my risk appetite? Which type of equity fund would you recommend?
- Chandrashekharan

The first thing to do is to define your risk appetite. Assuming you need money within one year to buy your bike, even if age is on your side, yet you don't have the risk appetite. So, it entirely depends on your time frame for a specific investment.

Investing Rs 1500 per month in a bond fund is quite a risk-averse way of getting started with your investments. Having said that, it does help one get used to receiving some return and accumulating it. In general, one may invest in debt funds to build an emergency corpus.

However, if you are investing for your long-term goals - those that are at least five years away - definitely consider equity.

If you have a tentative plan of buying something, then start conservatively and consider aggressive hybrid funds. It takes time and real effort in getting accustomed to the wildness of the equity market - more clearly to understand what kind of animal it is and to benefit from it. An aggressive hybrid fund, with its 65:35 equity to debt allocation, helps one get used to the market movements. The in-built debt portion acts as a cushion. So, when the market falls, the fund won't fall much and not push you out of the market.