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Tips for new investors: Temper expectations from small, mid-caps; invest with 3-5 yr horizon
In 2021, small and mid-cap equity indices ranked high on the Indian investment radar, delivering returns which surpassed those of their larger-cap peers amid a broad market rally in the year gone by. While the BSE Sensex notched up gains of around 21% in 2021, the BSE Midcap and SmallCap indices gave investors gains of 37% and 60% respectively. In the current year, however, investors, particularly new entrants, should be a bit more circumspect about the degree of returns to be garnered from the small and mid-cap space.
Any new investor who comes in should invest in the market from a longer-term perspective of 3-5 years. During this period, one can see the benefit of earnings compounding reflecting in investment compounding.
Source: ET Markets, Jan 30, 2022
