New Delhi, Aug. 30 -- Young investors often hear that they have decades ahead of them and can therefore afford to take higher equity risk. While equity can indeed remain the core of a portfolio for long-term wealth creation, experts say this does not mean investors in their 20s or early 30s should avoid debt mutual funds altogether.

Debt can play a role in providing stability, liquidity and diversification, particularly when the investment goal is closer or when market volatility makes it difficult to stay invested.

Sanjiv Bajaj, Joint Chairman & MD, Bajaj Capital, said young investors should not look at the equity-versus-debt decision in black-and-white terms.

A 25-year-old may have a long investment journey and therefore more room to...