Should I invest in debt funds to reduce risk? (2024)

I have started investing in mutual Funds about three months ago. I have been investing in three schemes.
Parag Parikh Flexicap Fund: Rs 2,500
Axis Blue Chip Fund: Rs 1,500
Mirae Asset Tax Saver Fund: Rs 2,000

My goal is long-term wealth creation. Apart from this, I do have some FDs etc. However, I am only investing in 100% equities in mutual funds. Shall I also invest in debt funds to reduce risk. Please suggest.
--Ujjal Das

We recommend goal-based investing to readers who are starting out small. For short-term goals that need to be achieved in five years, investors should opt for bank deposits and debt funds. For long-term goals, you can opt for equity schemes. Sure, you can also opt for an asset allocation of equity and debt for your long-term goals. But you should remember that such a combination would offer you lower returns. Since you are already making fixed deposits, your portfolio already has safe investments. If you are thinking of reducing risk, it is already done by your fixed deposits.
If you are not clear about mutual fund basics, you should seek the help of a mutual fund advisor. Don’t experiment with your money. Gain some experience and knowledge before handing your investments on your own.