Mutual funds are considered one of the best options for investment because they usually offer higher returns compared to safe platforms like fixed deposits (FDs). However, the returns from mutual funds depend on market fluctuations.
While investing in mutual funds, you will find many options. But today, we will focus specifically on large cap, mid cap, and small cap funds. These three types are also available when you invest in the stock market. That’s why it is important to understand them properly.
What is a Mid Cap?
Mid cap includes companies ranked from 101 to 250 in terms of market capitalization. These companies are smaller than large caps and are more affected by market fluctuations. So, they carry a moderate level of risk.
What is a Small Cap?
Companies ranked beyond 250 come under the small cap category. These are very small in size, so the risk is the highest. But these funds also have the potential to give very high returns if the companies perform well.
Which One is Better for You?
If you want to build a strong investment portfolio, it’s best to include all three types of funds—large cap, mid cap, and small cap. This balances risk and return. Along with mutual funds, also consider investing in safe options like FDs or PPF for security.
