You earned a return of 36% in 1 year, find out how much it is suitable to invest
If you are looking to earn higher returns by investing in mutual funds, you can consider investing in mid-cap equity funds. These funds belong to a category that has provided returns of up to 36% in the last one year. However, it’s important to note that mid-cap equity funds carry a higher level of risk. If you are comfortable with taking risks, investing in mid-cap equity funds may offer you better returns. We are here to provide you with information regarding this.
First, let me Explain What Mid-Cap Equity Funds Are
Mid-cap equity funds, also known as mid-cap funds, are mutual funds that primarily invest in the shares of mid-sized companies. As per the regulations set by SEBI (Securities and Exchange Board of India), these funds include companies with a market capitalization ranging from the 101st to the 250th largest companies. These funds have a balanced mix of risk and return potential because they invest in shares of these companies and adjust their holdings as the market changes.
If you Have the Ability to Take Risks, then Go Ahead and Invest
Mid-cap funds carry higher risks compared to large-cap funds. Therefore, only those individuals who are willing to take more risks and potentially earn higher returns should consider investing in these funds. Additionally, investments in such funds are generally suitable for a longer time horizon. In this scenario, if you are seeking long-term investment for a period of 2 to 5 years, you can consider investing in mid-cap funds. Historically, mid-cap funds have shown better performance than large-cap funds during bullish market conditions, but they can also experience greater declines during market downturns.
You can Allocate 20% to 30% of Your Portfolio in these Funds
According to experts, allocating 20% to 30% of your portfolio in these funds would be appropriate. This means that if you have a total of 100 rupees for investment, you can allocate 20 to 30 rupees in these funds. Investing within this range can be beneficial for long-term growth.
Investing Through SIP (Systematic Investment Plan) Would be Advisable
Instead of investing a lump sum amount in mutual funds at once, it is advisable for individuals to invest through a systematic investment plan, also known as SIP. Through SIP, you invest a fixed amount every month. This helps reduce the impact of market fluctuations.
Benefits of investing in mid-cap funds:
- Mid-cap companies have the potential for higher growth compared to large-cap companies.
- Mid-cap shares exhibit lower volatility compared to small-cap shares.
- Investing in mid-cap funds helps diversify your portfolio and brings in more variety.
Overall, investing in mid-cap funds can provide opportunities for higher growth while maintaining a relatively stable investment environment.
investing in mid-cap funds can be advantageous for several reasons. Mid-cap companies offer the potential for significant growth, as they are in a phase of expansion and have room for further development. These funds also provide a balance between stability and volatility, with mid-cap shares typically exhibiting lower volatility compared to small-cap shares. By including mid-cap funds in your portfolio, you can diversify your investments and benefit from the variety they offer. However, it’s important to consider your risk tolerance and investment goals before making any investment decisions. Consulting with a financial advisor can help you make informed choices tailored to your specific needs.