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Finance

Large-cap vs mid-cap vs small-cap MFs: All you need to know to get started

When it comes to investing, mutual funds can be a very investor-friendly option due to the low cost of investment and transparency around the underlying securities. For long-term financial goals, financial advisors typically recommend investing in equity mutual funds. These funds can be further classified on the basis of market capitalisation, which is also a categorisation of listed companies.

An introduction to market capitalisation 

The total value of shares of a company determines if it falls in to the broad categories of small-cap, mid-cap, or large-cap. When a company’s shares are available for public trading, the total value of that company’s outstanding shares in the market is called market capitalisation.

For instance, if a company has priced each share at Rs. 30 and if its total number of outstanding shares in the market is 50,000, the market capitalisation of this company can be calculated with the help of this formula –

Price per share x total number of outstanding shares

Rs. 30 x 50,000 = Rs. 15,00,000

Therefore, the market capitalisation of that company is Rs. 15,00,000 as of that day.

What are large-cap, mid-cap, and small-cap mutual funds? 

Small-cap funds

These are the funds that invest in shares of small-cap companies. These companies usually:

  • Are significantly smaller in size, relative to large- and mid-cap companies
  • Could have an opportunity for high growth in instances where an economy or a particular sector is emerging from recession or a low-growth phase
  • Carry high risk for an investor, as these companies may or may not be successful over time

Mid-cap funds

These are mutual fund schemes that invest in shares of mid-cap companies. These companies usually:

  • Are larger than small-cap companies, but smaller than large-cap companies
  • Are perceived to be less risky than small-cap ones but more than large-cap companies, from an investment point of view

Large-cap funds

These mutual funds predominantly invest in shares of large-cap companies. Such companies are:

  • Often referred to as Blue Chip companies, particularly when they make it to the top 50 or 30 companies basis market capitalisation
  • More likely to have a relatively stable business operations during any negative impact on the economy, when compared to mid-cap and small-cap companies
  • Are perceived to be the least risky among different equity categories

It is important to keep in mind that the performance of companies that have small-cap, mid-cap, or large-cap funds varies based on the economic environment and developments over time, and there cannot be any guarantee of risk-free returns from either of them.

Small-cap, mid-cap, and large-cap funds: How do they differ? 

The differences between large-cap, mid-cap, and small-cap have been discussed below across several verticals:

Market cap
Large-cap Invests minimum 65% of Assets Under Management in companies with a market cap of Rs. 20,000 crore or more
Mid-cap Invests minimum 65% of Assets Under Management in shares of companies with a market cap of less than Rs. 20,000 crore; with a lower cap limit of Rs. 5,000 crore
Small-cap Invests more than 65% of the Assets Under Management in shares of  companies with a market cap of less than Rs. 5,000 crore

 

Growth potential (subject to market volatility & term of investment) and risk associated
Large-cap Low growth potential, with relatively lower risk compared to mid-cap and small-cap
Mid cap Moderate growth potential and risk relative to the other categories of equity mutual funds
Small-cap High growth potential and risk relative to large- and mid-cap funds
Volatility
Large-cap Relatively low volatility as prices remain more or less stable even amidst major changes in the economy
Mid-cap Slightly more volatile than large-cap funds
Small-cap Highly volatile as the price fluctuates majorly according to the economic situation, or even industry specific trends

Different mutual fund schemes come with a different level of risk and growth potential. It is prudent to choose a mutual fund investment for your investments basis your own risk appetite that suits your financial goals.

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Finance

Popular Cryptocurrency Types to Invest in 2021

stack of cryptocurrencies: bitcoin, ethereum, litecoin, monero, dash, and ripple coin together, 3D rendering.

bitcoin, ethereum, litecoin, monero

There is a range of different cryptocurrencies available to those looking to invest in the digital crypto world. You will be familiar with Bitcoin, which we will go over briefly, then recommend some other up and comers to view.

Bitcoin

Bitcoin is still the go-to cryptocurrency of the year. At the start of 2021, it enjoyed its biggest rise yet, which also meant it inevitably had to come crashing back down, which it did.

It operated over a global shared network that can contain thousands of individual nodes on the blockchain. This is where you’ll find data regarding financial transactions, which grows when users add blocks.

Bitcoin has been around for over a decade now, originating in 2008 after that year’s disastrous global economic crisis. Whilst money is valued against gold, Bitcoin is measured against the global financial transfer rate.

Ethereum

Ethereum is easily the second biggest token available on the crypto market, after Bitcoin. This coin works within a more specialised part of the blockchain, using a more innovative part of the technology.

As with most cryptocurrencies, the coin does work through the decentralised distributed ledger. The difference here, however, is that the technology that it is backed against is about creating other crypto coins, amongst other digital technologies. This makes it a valuable asset in the digital world.

You can probably imagine that if other cryptocurrencies are doing well, Ethereum will also benefit due to what it actually does.

Bitcoin Cash

This token is eerily similar to Bitcoin, as you’d expect with a name like Bitcoin Cash; the difference here, though, is that it operates on its own unique blockchain. This differentiates it from Bitcoin through processes, but the reason it was created is interesting.

You see, this coin was introduced as a means to process transactions quicker, but through liquidity and money. It originated a few years ago when crypto miners who were all after Bitcoin realised that it might not be a long-term coin to mine and was possibly not sustainable.

Tether

If you didn’t know, Tether is often referred to in the crypto world as the more popular stable coin in the world. Whilst other coins serve various similar purposes, Tether is mainly used within the market to help with volatility by providing liquidity and a hedge.

This stable coin still uses the blockchain much like Bitcoin, but this coin follows the global economy closer, such as the EU Euro of the GB Pound. This coin is transparent, allowing anyone at any time to access the transactional history.

Compared to other coins, you will most likely find this token involved in the digital security industry in some capacity. That’s because digital securities are considered one of the means of participating within the blockchain technology and still obeying regulations.

As an investor looking for a coin to invest in, you’ll be able to make better predictions through this coin, as it’s always backed against actual assets in the real world. This means you can look at real-life examples and know which way the market is going.

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Investment

General Insurance in India: Know All About the Types of Plans & Their Coverages

Financial planning is essential even before you start to earn. It is one of the essential life skills to known how you can grow your money. While income sources will be limited on some or the other way, the growth opportunities aren’t. Sky is the limit for money to grow, but you also need to prepare yourself for unexpected emergencies. These unexpected emergencies can be in the form of death and health ailments and many more. Preparedness can help you get through these tough times. Insurance is the best way to have a financial safeguard during these times.

Insurance in India is primarily classified in two broad categories – life and non-life. As the name suggests, life insurance contributes a corpus on the death of the insured individual whereas the non-life deals for other types of events. Since non-life insurance deals with all types of situations, it is also called as general insurance. This article elaborates on these different types general insurance policies and the coverage they offer. Let’s have a look –

  • Health Insurance

After life insurance, the popular insurance coverage is the health insurance. Like a life insurance pays the beneficiaries after the death of the policyholder, a health insurance policy takes for the costs of medical treatment. With rising medical inflation, it has become a necessity and should be a part of everyone’s financial portfolio. Depending on the stage of your life, various insurance policies can be purchased considering your requirements. Hospitalisation cover is the favoured coverage under a health insurance policy but there are other benefits like pre and post hospitalisation cover too that can be purchased.

  • Travel Insurance

Travelling in a foreign land can often be bewildering. Different cultures along with communication limitation in some regions. In these places, even the slightest inconvenience can be of great difficulty to overcome. At these times, a travel insurance plan can aid to tackle these varied situations. Some commonly offered coverage options under a travel insurance is the baggage loss cover, flight cancellation cover, and more. These travel policies are also offered based on the types of travellers like students, senior citizens, corporate travellers, solo travellers, etc.

  • Motor Insurance

Unlike other types of insurance policies, a motor insurance policy is made mandatory for all vehicle owners. These bike and car insurance plans not only help cover the cost of repairs to your vehicle, but also pay for the liabilities due to a third-party in case of an accident. Third-party and comprehensive policies are two main types of motor insurance polices that can be purchased.

  • Marine Insurance

This type insurance policy is the one that reimburses the losses that may be faced by the insured in the event the goods are damaged during transit at the time of cargo transportation, loading and unloading. There are various perils like sinking, collision, jettison, navigation errors, etc that may have a financial impact. With a marine insurance plan, these losses can be insured.

  • Commercial Insurance

A business faces different types of risks based on the environment it operates. A general insurance policy can help mitigate these numerous risks that differ not only among sectors, but also based on the geography which the business operates. Some common risks that are classified under the category are liabilities because of property damage, customers, liabilities due against employee benefits, extended warranty benefits, and the like.

With these types of general insurance plans, not only your personal life is secured, but also your professional liabilities can be insured. So be it an individual or an organisation, the importance of an general insurance cover remains the same.  Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.

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Credit

What if I just need $150 to tide me over till payday?

There are so many people struggling with their finances every day. It can sometimes feel like you have nowhere to turn at your darkest hour. In some cases, the weight of pressure and expectation can be for what in reality is quite a small figure to worry about, but for you, at this time, it makes all the difference. It could be that you only need $150 to see you through the next week to ten days, until your pay-check is in your hand. In these situations, where you might not have the help of friends, family or you might not feel comfortable asking your employer for a cash advance, a fast payday loan could provide you with everything that you need to get through the next few days. As long as you know for sure that you can afford to pay it back when the time comes, a payday loan could be the perfect answer to your current problems.

On average, most payday loans are taken out between $150 and $300. There are so many people who take advantage of this short-term credit service, as it is an easy and efficient way to help cover the cost of essentials until payday, to pay a bill that is unexpected and to bridge the gap when you are faced with unexpected costs or higher costs than you were expecting for an essential service or product.

There are a few different options open to you if you need some small amount of cash to see you through and make sure you are covered for essentials until your next payday.

Borrow money

The first thing to do is to think about your current situation with friends and close family members. Is there any person that you know that you feel comfortable talking to about your predicament? It is important that even if you feel incredibly stressed and panicked about your financial situation, that there is someone you can talk to openly and honestly. If that person can lend you money, great, but even if they can’t they might be able to offer a sympathetic ear to listen to your problems and ease the burden somewhat.

Credit Card

If you have a credit card or you are thinking about applying for a credit card, this might give you the option to spend on essentials without worrying too much about the pressure of a certain date to pay back the bill in total. It is always good practice to pay off your credit card each month, and it helps to build your credit score too. Just be careful that it doesn’t quickly descend into a cycle of credit card debt.

Overdraft

If you have access to an overdraft facility with your bank, it could be that taking the $150 that you need out of there is more cost efficient than any other option. Check the interest rates and the fee you’ll be charged for using the overdraft in the first place, in some cases it costs more to use an overdraft than it does a payday loan.

If none of these options are open to you, or seem to cost prohibitive, a fast payday loan service could be the answer you are looking for. It helps you out with a one-off payment, that you pay back within a month. No harm to your long-term finances.

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