According to reports from Mint, Sanjiv Bajaj, Joint Chairman & MD, Bajaj Capital, emphasizes that young investors should not view debt as a constraint but rather as a strategic tool. He explains that while a 25-year-old may have decades ahead and more room for equity risk, investing is not solely about pursuing the highest possible returns. Krishanu Choudhary, Director & Unit Head, Anand Rathi Wealth, supports this approach, stating that debt can provide stability, liquidity and diversification across all age groups. As reported by Mint, a combination of less correlated assets helps reduce overall portfolio volatility and concentration risk.
As reported by Mint, experts recommend dividing investments into short-, medium- and long-term goals rather than applying age-based formulas. Bajaj explains that someone needing money within one to two years may not be suited to high-equity allocation regardless of age. Choudhary illustrates this with a 25-year-old investor having three goals: a holiday within one year (100% debt allocation), wedding in three to five years (60:30:10 equity:debt:gold), and retirement in more than 25 years (80:20 equity:debt). According to Mint, income stability, existing liabilities, and individual comfort with market volatility should also factor into asset allocation decisions.
According to reports from Mint, Bajaj recommends young investors favor simpler, lower-credit-risk categories over funds offering higher returns through greater risk. For relatively short-term requirements, liquid funds, ultra-short-duration funds and money market funds may be suitable depending on time horizon. Choudhary suggests evaluating debt-oriented categories based on tax slab rather than age, with target-maturity funds for lower tax bracket investors and arbitrage funds for higher tax bracket investors. As reported by Mint, investors should avoid selecting credit-risk funds based solely on attractive returns and understand how interest rate changes affect NAVs.
According to Mint reports, experts distinguish between emergency corpus and investment portfolio requirements. Bajaj recommends keeping core emergency funds in savings accounts or sweep-in fixed deposits for straightforward money access during emergencies. Choudhary suggests liquid funds or fixed deposits for emergency corpus, building an equivalent of 6 to 12 months of expenses plus recurring costs. As reported by Mint, a liquid fund can serve as supplementary emergency layer for investors comfortable with it, but should not replace readily accessible cash.
