Equity is designed to bear risk in bad times.
When you invest in equity you take the risk that the business will be unsuccessful and that you will lose money. The only reason that people invest in equity is because they expect on average that the business will be successful and that they will make money in compensation for bearing this risk. Historically equity markets have delivered high returns. It is reasonable to expect that in the future too, one should expect to get higher returns for bearing equity risk. However, when one invests in equity, one is taking risk while hoping to generate higher returns than fixed income investments and interest rate investments like government or corporate bonds or bank fixed deposits.
