📖 Learning Path
Safety vs Growth
When to protect your money and when to grow it.
TL;DR
Safety = money you can't afford to lose (emergency fund, short-term goals). Growth = money you won't need for 5+ years. The split depends on your timeline, risk comfort, and age. There's no perfect ratio, just what works for you.
The Simple Framework
🛡️ Safety
Money that must be there when you need it.
- • FD, RD
- • PPF, EPF
- • Liquid funds
- • Debt funds
📈 Growth
Money you can let ride through ups and downs.
- • Index funds
- • Equity mutual funds
- • ELSS
- • Stocks (with experience)
How to Decide Your Split
1
Identify your timeline
Money needed in 1-3 years should be mostly safe. 5+ years can lean growth.
2
Check your risk comfort
Can you watch your investment drop 20% and not panic? Be honest.
3
Consider your age
Younger = more time to recover from drops. But age isn't the only factor.
4
Start conservative
If unsure, start with more safety. You can shift to growth as you learn.
5
Review annually
As goals and comfort change, adjust your split.
Common Mistakes to Avoid
- ✕Going 100% equity without an emergency fund
- ✕Keeping everything in savings account for years
- ✕Changing allocation based on market news
- ✕Following someone else's exact ratio without thinking
- ✕Forgetting to rebalance as you get closer to goals
Simple Checklist
Emergency fund in safe instruments
Short-term goals (<3y) in safe instruments
Long-term goals (5y+) include some growth
Comfortable with my current split
Will review in 12 months