Debt: The Unsung Hero (Part 1)
Why investors miss the forest for the trees when it comes to debt investing.
Let’s say you invested ₹1 lakh in both equity and debt for 5 years, from 2020 to 2025.
Here are the returns you would expect in equity: ₹2,93,523 (24%).
And here’s what you get with debt: ₹1,31,390 (5.6%).
Clearly, equity stands out. It shines!
Not just over the past five years, put it under the spotlight in most five-year windows, and it usually steals the show.
And then… There's debt.
The quieter cousin.
Underrated. Often berated, especially when seated next to equity’s glittering track record.
But before we get back to clapping for equity, let’s rewind and look at a few five-year windows where equity stumbled.
Other 5-Year Periods | ₹1 lakh invested:
And during those periods, debt didn’t dazzle either.
But it didn't dip like equity either. It held steady. It offered comfort.
It gave you breathing space when equity was gasping!
Still, let’s be honest, debt rarely excites anyone.
It doesn’t make you smile, or celebrate, or jump out of your seat.
It just... gives you stability, especially when you need it the most.
So, is that all debt is good for?
A safety net when equity throws a tantrum?
That’s how most investors treat it, barely giving it a second glance.
But here’s the twist.
Allocating to debt isn’t just for the conservative or the risk-averse.
In fact, it might just be the hallmark of a shrewd, aggressive investor.
Wait, what?
Debt and aggression?
Sounds like we’re flipping the script, doesn’t it?
Stay tuned for Part 2 of this story!
Equity is represented by the Nifty 500 Index and Debt by a Money Market Mutual Fund.
Historical five-year windows referenced: 1 May 1998 – 25 April 2003 | 1 January 2008 – 31 March 2013 |1 April 2015 – 23 March 2020 |30 June 2020 – 30 June 2025