The new-age investors who have joined the market in the last 2 years are mainly focusing on increasing their portfolio by just buying the equities of the market, their portfolio will be around more than 90% in equity and that has worked in their favour till now because the market is not down too much.
PC; Pixabay.com
The problem with having full in equity is that when the market goes down your entire portfolio is down by whatever percentage the market is down or might be more. This is where whenever we have to invest we have to take risk into account, it's ok to invest 80% in equity but we also should have some percentage in debt because our worth will be known only in the bear market.
People who have invested in debt can able to move some of their funds from debt to equity when the market had gone down a lot and thus when it goes up, they can move it back to the debt in this way there is a balance between the risk. Also, one more scenario is that if you have some emergency you can actually get the money from the debt without having any problem but if you are in full equity and if the market is down you have to sell in loss to get that emergency fund.
I know people should have emergency funds kept with them, but that is not the case with everyone and most of them think that keeping in debt can serve as an emergency fund. That is somewhat true but not fully. Along with that 80% equity is for people who can take some risk whereas if you do not want to take much risk then keeping 60% in equity is a much better option.
The Provident Fund is a debt but only for retirement things, you cannot consider it as debt because you will not get that money easily before retirement, so if you are saving for any other goal than retirement then you have to invest especially in debt instruments.