What are the key differences between equity and debt mutual funds?

What are the key differences between equity and debt mutual funds?

Equity mutual funds invest primarily in stocks, aiming for capital appreciation, while debt mutual funds invest in fixed-income securities for regular income.

Which one is riskier?

Equity mutual funds are generally riskier due to market volatility, whereas debt mutual funds are considered safer but offer lower returns.

Can you give examples of each?

Sure! An example of an equity mutual fund is the XYZ Growth Fund, while a popular debt mutual fund is the ABC Bond Fund.

How should I choose between them?

Consider your financial goals, risk tolerance, and investment horizon. If you seek growth and can handle risk, go for equity; if you prefer stability, choose debt.

What are the tax implications for each?

Equity mutual funds are subject to long-term capital gains tax if held for over a year, while debt funds have different tax rates based on the holding period.