Equity funds are mutual funds that invest predominantly in stocks (equities). They aim for capital appreciation over the long term and typically carry higher volatility than debt funds or fixed deposits.

Types of Equity Funds

• Index funds — Track a market index (e.g. Nifty 50); low cost, broad diversification
• Large-cap — Invest in large, established companies
• Mid-cap / Small-cap — Higher growth potential, higher risk
• ELSS — Tax-saving equity fund with 3-year lock-in

Role in FIRE

Equity funds are the growth engine of most FIRE portfolios. Over 15–30 years, equities have historically outperformed debt and inflation. FIRE investors typically use index funds for low-cost, diversified equity exposure, paired with asset allocation and rebalancing.