Stock Market Investment What is the difference between Equity,Debt and Balanced Fund? Suprika

Equity is more risky, because it's depends on the behaviour and fluctuation of share price of the respective scrip, so you cannot expect fixed return in equity. Debt gives you fixed return, incase of any global turmoil or economic slowdown, so it's less risky compared to equity. Balanced Fund means it's a combination of both equity and debt funds in the investment portfolio. read less

Hi Suprika, All these three are different types of investment options. Now primarily it depends on the risk appetite, goal for which the investment is being done and duration of the investment decides where to invest out of these three different options. Equity - It is nothing but shares which means if a person is investing in equity of a company - he/she will get the ownership of the company by the number of shares he/she owns. In this case, if the company does well - the equity of the company will do well - the share price of the company goes up and hence the investor will make money and vice versa. This is the reason one has to understand the business of the company before purchasing its equity otherwise it can be too risky. But if some person understand the business and invests into its shares, it can prove to be the best way to make money as well. In short its like MORE RISK MORE RETURN Debt - Debt funds invest in the bond market. Its a financial instrument that provides a fixed interest to the investor and a fixed principal on maturity. It acts almost like a Fixed deposit of a bank. It is a safer way of investing where the investor will get a certain percentage per annum on its principal amount. In short its like LESS RISK LESS RETURN Balanced Fund - Balanced funds are the mutual funds which consists of both equity and debt in almost equal proportion. In this case we will be investing or giving our money to fund managers who are very highly informative and knowledgeable and they will take the decision on our behalf of what all equities and debt instruments they have to purchase so that the fund will do good. In short - its MEDIUM RISK MEDIUM RETURN. read less

Equity funds invest in stocks. These are of high risk and high returns. These funds are appropriate for the Long term investors. Debt funds invest in debt market instruments like Bonds, Debentures etc. These are of low risk than that of Equity funds. Balanced fund is combination of Equity and Debt fund. The proportion in which the money is invested in Equities and Debt securities will be mentioned in Fund Offer Document. read less