FAQs

Small caps companies have the caliber to grow faster compared to the large caps. There can be a number of hidden gems in the small-cap industry which might not have been discovered by the market yet. However, their true potential is still untested. On the other hand, large-cap companies have already proved their worth to the market.

Anyways, the quality of stock is more important than the size of the company. There are a number of large-cap companies which has consistently given good returns to its shareholders. Overall, investing in small caps can be more profitable than large caps if you’re investing in right stocks.

Technically, it can go down 100% and the stock price may fall to zero. There are a number of stocks which has destroyed the wealth of the shareholders by over 90%. The most common example is Suzlon Energy. However, a 100% capital degradation is very unlikely- unless the company files a bankruptcy.

What to do in such case? If you find out that your study was wrong or the fundamentals/circumstances changed after you invested, there is no shame in accepting the truth. If you won’t accept it, then you are the only one who will be affected financially and mentally. Just accept that it was a wrong investment and move to the next one.

Your stock portfolio will always consist of multiple stocks. At any particular time, some stocks will perform excellently well, while some will not. Your portfolio returns will be the average of both.

During a good market, your portfolio can give you a return as high as 30-35% (the benchmark index nifty alone gave a return of over 26% last year (2017)). However, during a bad market- the returns can be as low as 2-5% (maybe even negative).

If you sum up everything, you can expect an annual return of 15-18%, depending on how good you were at picking stocks. Nevertheless, you can generate even better return if you are ready to put some hard work.

Definitely. Many people have done this in the past and you can do it too. The stock market is popular for creating wealth for the intelligent investors.

However, this is not easy and it requires a lot of hard work. If you are hoping to make great money from stocks, then be ready to spend serious efforts and plenty of time researching companies.

Always remember the old proverb- ‘You will never know if you never try’. Most people don’t even get started investing in stocks just because they are too afraid. Dare to be different and be passionate enough to chase your dreams. The stock market is giving you an opportunity to create wealth if you are willing to take it. Happy Investing.

ou should avoid investing in stocks with low liquidity. There are a number of small-cap stocks where the prices may be continuously falling, but the investors are not able to sell that stock just because there are no buyers. Avoid investing in companies with low liquidity.

Further, for the beginners- I would also advise avoiding investing in penny stocks. These companies are very risky and prone to different scams like pump and dump etc.