Now, let’s see how Equity and Debt have performed in the past.

Money Lessons from Cricket!
Learn How to Invest & Grow your Wealth

Guess who this batsman from the current Indian team is…

• Played 200+ ODI innings
• Scored 9,000+ runs
• Has an average of ~50 and strike rate of ~90

Well, if you haven’t guessed yet… he is India’s opening batsman!

So, what’s the secret to such an outstanding track record? Well, it’s his ability to strike a balance between hitting 4s/6s, keeping the scoreboard ticking through 1s/2s and defending good deliveries — almost half of his runs are in the form of 4s and 6s and rest are in 1s, 2s and 3s.

So, as investors, what can we learn from this?

Here’s a simple comparison to help you:

So, the next time you watch your favourite batsman hit a big score, think about how you can do the same with your wealth number.

Now, let’s see how Equity and Debt have performed in the past.

To understand the performance, let’s consider an example. If you had invested ₹10,000 in each category on April 1, 2005 this is what it could have grown to by April 2020:

As you can see, while in the long-term Equity has performed well, it goes through ups and downs in the short-term as compared to Debt, which is more stable. This is the primary reason why many investors don’t stay invested in equities.

But, what if you could get a good balance between the two categories such that you reduce the ups and downs without giving up too much on your final returns? See the next chart which shows how such a balance can help you.

Isn’t this interesting? The ups and downs are lesser and yet your 10,000 could grow to almost Rs. 50,000!

In fact, adjusting your allocation across different types of investments depending on the market conditions, is considered to be the best way to build wealth.

To know more about such investments, click here.

Disclaimers:
Chart 1: Based on performance of Nifty Short Duration Debt Index and Nifty 50 TRI from April 2005 to 30th April 2020.
Chart 2: Based on performance of 50:50 allocation between Nifty Short Duration Debt Index and Nifty 50 TRI from April 2005 to 30th April 2020 with monthly rebalancing.
Past performance is not an indication of future results. Source: ICRA MFIE

Mutual Funds investments are subject to market risks, read all scheme related documents carefully before investing.

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