Equity or Debt? Simplest way to calculate your risk using AGE!

With the decrease in the interest rates on fixed deposits there comes a question in the minds of the investors that whether to park the surplus in FDs or switch to some better alternatives. The best solution of the risk averse investors is to park their money into debt funds which generate returns more than fixed deposits with better taxation.

100 minus your age concept: Age factor plays a vital role in defining your risk profile. To understand how much amount should be allocated to Equity or Debt one can use the concept of 100 minus your age. This sounds funny but proves fruitful and suggests about the proportion in which the investments must be made in debt and equity respectively depending upon the age of the individual. Let’s make it simple with an example if the investor’s age is 20 years then your portfolio should contain 100 – 20 (age) = 80% in Equity and rest in debt because this is the period wherein risks are affordable whereas on the other hand if the investor’s age is 60 years then he should have 60% as debt as it is a retirement period and the risk bearing ability of the individual would be low.

Now the question arises on which funds to select. Below gives a highlight on one of the Debt funds that we recommend to our clients:

 Birla Sunlife Dynamic Bond Fund:

 The below shown is one of the best contestant in this category. This fund is an open ended income scheme that invests in government securities having maturity period of 8-12 years and corporate bonds having Crisil rating AA- and above. Investing in this fund is the best approach to make money from a fall in interest rate.

 Birla Sun Life Dynamic Bond Fund Growth Weekly Chart

BSL Dynamic Bond Fund..20151208


Birla Sun Life Dynamic Bond Fund Growth

The portfolio for this fund is shown below:

Untitled 1..20151208

Returns as of 8th September, 2015

Untitled 2....20151208

Load Structure: w.e.f 27-Apr-2015, Entry Load – Nil, Exit Load: For redemption/switch-out of units within 90 days from the date of allotment: 0.50% of applicable NAV. For redemption/switch-out of units after 90 days from the date of allotment: Nil

Risk Profile: We will consider this fund as Moderate Risk suitable for someone comfortable with investing in corporate bonds.

In a nutshell, one has to prudently allocate funds across Equity and Debt. We use indepth research to identify the funds that has potential to outperform in future rather than just looking at past performance.

For Investments in Mutual Funds get in touch with us at helpdesk@wavesmf.com or contact us on +91 9920922639. Also get free access to periodical research along with your investments.

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