Want to become rich, but don't know where to start? Here is decoder

It is every person's personal ambition to become rich fast and that drives him or her to keep struggling on in a desperate manner through jobs and businesses.

Small-cap vs Mid-cap vs large-cap: Mutual fund investment are on the rise in India, especially among the investors who believe in making an ocean from an ice cube. Photo: Reuters

Indeed, it is every person's personal ambition to become rich fast and that drives him or her to keep struggling on in a desperate manner through jobs and businesses in order to accumulate great wealth. In today's day and age this desire to become rich has become much easier for all concerned provided they know what to do. That is where most people fail. They do not know where to start and end up trusting the wrong people and make wrong investments thereby losing money. Now, here we give you, your ladder to riches.

We explain to you the benefits of the most important investment options available. These are mutual funds and they represent your ticket to riches. Every person must invest in mutual funds, even small amounts will do. Where? There are a number of mutual fund options and you can learn about what is suitable for you. However, there are various categories that have been made for various types of investment goals. Hence, a mutual fund investor must know the difference in those categories. Check out the difference between Small-cap and Mid-cap vs large-cap MF options, which are the most-talked-about in terms of returns:

Small-cap vs Mid-cap vs large-cap: Mutual fund investment are on the rise in India, especially among the investors who believe in making an ocean from an ice cube. According to the mutual fund investment experts, mutual funds can be categorised into a debt fund and equity funds. In the equity mutual funds, it can be further categories into small-cap, mid-cap, large-cap and ELSS mutual funds. For a mutual fund investor, it becomes important that for which investment goal these mutual fund categories should be chosen by an investor.

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Speaking on the difference in small-cap, mid-cap and large-cap mutual funds from a return point of view Kartik Jhaveri, Manager — Wealth Management at Transcend Consultants said, "Small and mid-cap funds typically outperform large-caps during a bull market, but decline more when the sentiment turns bearish. The choice of the right fund should be in line with the risk appetite, return expectations and investment horizon of the investor." He said that Small-cap funds typically have the highest growth potential, since the underlying companies are young, and seek to expand aggressively. They are more vulnerable to a business or economic downturn, making them more volatile than large and mid-caps. Investors who are keen to invest in the small-cap space and may not have the time to research but possess the high risk-taking capacity can look to invest in small-cap funds.

On how much a mutual fund investor can expect a return and how these categories have given returns Balwant Jain, a Mumbai-based tax and investment expert said, "The small-cap mutual fund category is topping the return chart with 14.72 per cent in five years. The category has offered 16.01 per cent in the 10-year horizon. Whereas the large-cap category has given returns of 10.12 and 12.05% during the same period respectively."

Having said this, people should remember that if they invest in mutual funds, then they must do 2 things, else they may lose their money. First thing is to invest on a regular basis, it can be on a monthly basis. The second one is even more critical and here, investors must not remove their money from an investment after a short period. To get the best profit, you need to invest for at least a 3 year period. The best result comes from 5 year investments, of course. So, now that you know, start investing NOW!

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