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Well-known value investor Benjamin Graham once said, “The best way to measure your investing success is not by whether you’re beating the market but by whether you’ve put in place a financial plan and a behavioural discipline that are likely to get you where you want to go”.
Nothing can describe the concept of investing in a better way than this. However, when it comes to investing, investors are always in a dilemma as to the selection of the best investment plan. With so many investment avenues available, it is important that the investors know their investment goals before they begin. Let’s understand what are the points you should keep in mind while selecting the best investment plan, followed by some of the best investment avenues that deserve a place in your portfolio.
Investment plans require a systematic approach. Various factors drive investment plans. Most noticeable among them are the multiple financial goals that you may have. Financial goals have timelines, and investment plans must be aligned with them. Investment plans also need to be aligned to cash outflows, such as payment of rents, utility bills, and short-term obligations due to borrowings.
Multiple factors need to be considered while you evaluate the best investment options. Investment plans are typically evaluated on return, risk, tax, and liquidity parameters. However, investment plans are not just about multiplying wealth and selecting suitable investment options but also about teaching a habit of investment.
Let us understand the various aspects of investment plans in multiple contexts.
High return is a relative term. However, returns sufficiently higher than risk-free returns can be considered high. Risk-free return is earned by investing in government securities. Below are examples of some of the best investment schemes with high returns:
a) Mutual Funds, specifically those investing in mid- and small-cap: While equity mutual funds generally have high return potential, it is mid- and small-cap funds that generate a much higher return. Understanding that the high expected return of mid and small-cap funds comes with increased risk is essential. If you are investing with a time horizon of 4-5 years, then mutual funds are some of the best investment plans for 5 years.
It is pertinent to note that schemes of various mutual funds comprising large-cap stocks also have the potential to generate high returns. An investor can create a good mix of large-cap, mid-cap, and small-cap funds to create a high potential return.
b) Direct Equity Investment: Direct equity investment has been a preferred choice for generating a high return. However, this can be riskier than mutual fund investment. Selecting companies, which have the potential to generate a high return, can be challenging as it requires an understanding of various financial and non-financial parameters. However, investors can select companies based on critical parameters such as consistent profitability, significant market share in goods or services offered, management capabilities, and sound track record of corporate governance.
c) Equity-linked Savings Scheme (ELSS): Mutual fund investment in ELSS comes with dual benefits. First,these plans can generate a high return and investment of up to Rs 1.5 lakhs; also, these schemes qualify for tax deduction under section 80C. However, there is a three-year lock-in, meaning money invested cannot be withdrawn for 3 years.
There are many plans available for short-term investment. These plans can meet investment requirements of 1 to 3 years. Some of these investment plans are as follows:
Liquid Plans: These plans invest in money market instruments maturing within 90 days. Returns generated by these plans are comparable to savings accounts and range between 3% to 4%.
Low-duration Funds: The low-duration funds invest in securities based on duration. Typically, they target securities with a duration of 6-12 months. These are also considered one of the best investment plans for 1 year.
Recurring Deposits: These deposits can be opened for 12 to 120 months. You must deposit a fixed amount of money each month in regular deposits. They offer a fixed rate of returns. With increasing interest rates, they have become an attractive investment option.
Fixed Maturity Plan: Fixed maturity plans are close-ended mutual funds that invest in fixed-income instruments with corresponding maturities. Fixed maturity plans come with a maturity period ranging between 1month and 5 years.
Arbitrage Funds: These funds are suitable for investment for 1 to 3 years. They make money by exploiting price differences of the same assets in two different markets.
Apart from those mentioned above, there are many other investment options, such as treasury bills, money market funds, direct investment in short-term bonds, etc., where investors can park their money for a short term. These are some of the best investment plans for 3 years.
“Never depend on a single income. Make investment to create a second source”. These words by Warren Buffet underline the need for a second income source through investments. Let us look at some of the best investment plans for monthly income:
a) Corporate Fixed Deposits with monthly income: Non-banking finance companies raise deposits from investors and offer the option of monthly interest. Bajaj Finance, HDFC, etc., are examples of such companies. The amount and tenor of investment ranges differ from one company to another.
b) Monthly Income Plan of Mutual Funds: These are debt-oriented hybrid mutual funds that typically give a fixed return every month. Returns usually are not very high but potentially can be higher than Post Office Monthly Income Scheme (POMIS).
c) Systematic Withdrawal Plans (SWPs): As the name suggests, SWPs are meant to help withdraw your investments in mutual funds at predetermined intervals. To benefit from these plans, you must first build a good corpus.
d) Post Office Monthly Income Scheme (MIS): Investment in the monthly income scheme can be made in multiples of Rs. 1000. Maximum investment limit is INR 4.5 lakh in a single account and Rs. 9 lakhs in a joint account. Interest rates are determined periodically. The current interest rate is 6.6% per annum.
Investment Option |
Duration/ Period of investment |
Who can invest? |
Risk |
Returns offered |
Investment Amount Limit |
Tax Benefits |
Mutual Funds |
Lock-in of 3 years for ELSS funds. Ideal investment tenure is: Equity mutual funds: Above seven years Debt mutual funds: Below three years |
Investors with short and long-term goals and want to earn potentially higher returns. |
Low to very high-risk |
Market linked |
Rs 100 – No limit On Jupiter App, you can invest from as low as Rs. 10 daily, weekly, or monthly |
Investment in ELSS funds qualifies for tax deduction under Section 80C, and capital gains are taxable |
Fixed Deposits |
Seven days to 10 years |
Resident individuals, HUF, trusts, public and private companies |
Low risk |
3%-8.5% per annum |
Rs 500 – Rs 5 crores |
Investment in tax savings fixed deposits qualifies for tax deduction under Section 80C. Interest is taxable |
Equity Shares |
Ideally, for long terms above seven years |
Investors with a high-risk tolerance |
Very high risk |
Market linked |
Rs 1 – No limit |
Capital gains are taxable as per existing tax rules |
Digital Gold |
Ideally, for the long term, between 5- 7 years |
Investors who want to diversify and hedge their portfolio against market volatility |
Medium risk |
Market linked |
Rs 1 – Rs 2 lakhs |
Capital gains are taxable as per existing tax rules |
Sovereign Gold Bonds (SGBs) |
Eight years |
Investors who want to diversify and hedge their portfolio against market volatility |
Medium risk |
2.5% interest per annum, capital appreciation is market-linked |
1 unit or 1 gram of gold and a maximum of 4KG |
Capital gains are exempted from tax if you hold it for eight years. Interest is taxable. |
Physical Gold |
Ideally, for long terms above seven years |
Investors who want to diversify and hedge their portfolio against market volatility |
Medium risk |
Market linked |
1 gram |
Capital gains are taxable as per existing tax rules |
Gold ETF |
Ideally, for long terms above seven years |
Investors who want to diversify and hedge their portfolio against market volatility |
Medium risk |
Market linked |
1 unit or 1 gram of gold |
Capital gains are taxable as per existing tax rules |
Senior Citizen Savings Scheme (SCSS) |
Five years can be extended for another three years |
Individuals who are 60 years and above, or individuals who are above 55 but below 60 and have retired under superannuation |
Low risk |
8.2% per annum |
Rs 1,000 – Rs 30 lakhs |
Investment qualifies for tax deduction under Section 80C. Interest is taxable |
National Pension Scheme (NPS) |
Until the investor reaches 60 |
Indian citizens between 18 and 70 years |
Medium to high-risk |
Market linked |
Rs 500 – No limit |
Investment qualifies for tax deduction under Section 80CCD (1). Annuity is taxable |
Post Office Monthly Income Scheme (POMIS) |
Five years |
Only resident Indian citizens who want to earn monthly income |
Low risk |
7.4% per annum |
Rs 1,000 – 15 lakhs |
Interest is taxable |
Recurring Deposit (RD) |
1-10 years |
Resident individuals, HUF, trusts, public and private companies |
Low risk |
4%-6.3% per annum |
Rs 25 – No limit |
Interest is taxable |
Public Provident Fund (PPF) |
15 years |
Only resident Indian citizens who want to earn guaranteed returns |
Low risk |
7.1% per annum |
Rs 500 – Rs 1.5 lakhs |
Investment, interest, and maturity benefit is exempt from tax |
RBI Saving Bonds |
Seven years |
Only resident Indian citizens and Hindu Undivided Families can invest on an individual or joint basis. |
Low risk |
8.05% per annum |
Rs 1,000 – No limit |
Interest is taxable |
Unit Linked Insurance Plan (ULIP) |
5 to 25 years |
Investors with long-term goals who want to earn high returns and insurance |
Medium to high-risk |
Market linked |
Rs 500 – No limit |
Investment in ULIPs qualifies for tax deduction under Section 80C; maturity benefit below Rs 2.5 lakhs is tax-free. |
Initial Public Offerings (IPO) |
Ideally, for long term above seven years |
Any individual with a demat account who wants to accumulate long-term wealth |
High risk |
Market linked |
One lot |
Capital gains are taxable as per existing tax rules |
Real Estate |
Ideally, for long term above seven years |
Indian citizens, residents and non-residents can invest in real estate |
High risk |
Market linked |
Very high investment |
Capital gains are taxable as per existing tax rules |
Cryptocurrencies |
NA |
Any individual who wants a high return by taking high-risk |
High risk |
Market linked |
NA |
Capital gains are taxable at 30%. |
Real Estate Investment Trusts (REITs) |
Ideally, for long term |
Any individual that wants to participate in the real estate sector with limited investment |
High risk |
Regular dividend |
Rs 10,000 – Rs 15,000 |
Dividends and capital gains earned from REITs are taxable |
Corporate Bonds |
1-10 years |
Any investor who wants to earn fixed returns |
Low to medium risk |
Fixed interest payment |
Depends on the issuer of bonds |
Capital gains and interest are taxable as per existing rules |
Government Bonds |
5-40 years |
Any investor who wants to earn fixed returns |
Low risk |
Fixed interest payment |
Rs 1,000 – No limit |
Capital gains and interest are taxable as per existing rules |
Peer-to-Peer Lending |
NA |
Any investor who wants to earn fixed returns |
Medium to high-risk |
Fixed interest payment |
NA |
Interest is taxable as per existing tax rules |
Sukanya Samriddhi Yojana |
21 years |
Only parents of girl child |
Low risk |
8% per annum |
Rs 250 – Rs 1.5 lakhs |
Investment, interest, and maturity benefit is exempt from tax |
Small Case |
Ideally, for long term |
Investors with high-risk tolerance and have knowledge about the markets but lack time to scan the entire universe of stocks |
High risk |
Market linked |
Varies from small case to small case |
Capital gains are taxable as per existing tax rules |
Mutual funds are financial instruments that pool money from multiple investors and invest in different asset classes, such as equities, debt instruments, and government securities. They are managed by experienced professional managers who pick the securities for the portfolio after thorough market research. You can invest in mutual funds in lumpsum or regularly through SIP (Systematic Investment Plan).
There are mainly three kinds of mutual funds, namely equity, debt, and hybrid. Based on your financial goals and risk tolerance, you can choose to invest in a fund that best suits you. Equity funds suit long-term goals, and for those who have a high-risk tolerance, debt funds suit short-term goals and for those who have a low-risk tolerance, and hybrid funds suit medium-term goals. When the value of underlying securities increases, the mutual fund value also increases, resulting in capital gains. The capital gains from your mutual fund investments are taxable as per the existing rules.
Fixed deposits are an investment tool through which you can invest money and earn fixed interest. Banks issue fixed deposits for a tenure ranging from 7 days to 10 years, and the interest rate varies based on tenure. The money you invest is locked in for the entire duration, and the interest is paid either at maturity or at regular intervals.
Fixed deposits are low-risk investments and best suit investors who want to earn guaranteed returns on their investments. The investment in tax-saving deposits qualifies for tax deduction under Section 80C. However, the interest is taxable as per the investor’s income tax slab rate.
Equity shares are financial instruments that represent ownership of a company. When you purchase equity shares, you become the owner of the company to the extent of the capital you contribute. Equity shareholders benefit from the appreciation in the price of the share and also earn regular income in the form of dividends. You can purchase equity shares when they are first issued through an Initial Public Offering (IPO) or from the secondary market through your demat account.
The return from equity shares isn’t fixed and depends on the market demand and supply. Hence, equity shares fall under the high-risk category and best suit investors who have a high tolerance for risk. Equity shares have the potential to give high returns in the long term. Hence, investors with long-term goals can consider investing in equity shares. The capital gains from equity shares are taxable. The short-term capital gains are taxed at 15%, and the long term capital gains above Rs 1 lakh are taxed at 10%.
Digital gold is an alternative to physical gold. It is the digital equivalent of physical gold and can be purchased online. When you purchase digital gold, the equivalent value of physical gold of 99.99% purity is stored in a safe vault by the digital gold providers. The minimum investment in digital gold is Rs 1, and the maximum is Rs 2 lakhs. Several online platforms, such as Jupiter Money, Google Pay, and Paytm, offer digital gold on their platform.
Investing in digital gold has several advantages. First, you need not worry about the safety and purity of the gold. Second, you can convert it into physical gold at any time or sell it to earn capital gains. Third, you can purchase digital gold with an investment as low as Rs 1.
Digital gold providers allow you to store your digital gold for a duration of five years. After which, the gold is sold automatically, and the proceeds get deposited into your bank account. The capital gains on digital gold are taxed just like physical gold.
The Reserve Bank of India (RBI) issues Sovereign Gold Bonds (SGB) against grams of gold. Each unit represents one gram of gold, which is also the minimum investment. The maximum investment is 4 kgs. The bond pays a fixed interest of 2.5% per annum, which is credited to your account annually. The duration of the bond is eight years. However, the investment is locked in for five years.
Apart from earning interest, you can benefit from the appreciation in the value of gold. The capital gains are tax-free if you hold the bond for eight years. If you sell the bonds after five years, the capital gains are taxable. The interest is also taxable as per your income tax slab.
One of the most popular gold investments is buying gold in the form of jewellery, coins, or biscuits. You can purchase gold from any dealer or jewellery shop owner without a demat account. Investing in physical gold has several benefits. It helps protect your portfolio against inflation, can be passed on to the next generations without any hassle, and you can also get a loan against it. However, there is always a risk of theft and storage when you purchase physical gold. The capital gains from physical gold are taxable at 20%.
Gold ETFs (Exchange Traded Funds) are mutual funds that invest in gold bullion and are the most popular alternatives to physical gold. One unit of ETF equals one gram of gold and is backed by the highest purity of gold. You can invest in gold ETFs through your demat account. When you sell your units of gold ETF, you will get cash instead of gold.
Investing in gold ETFs is safer than physical gold as there is no storage problem. Moreover, you need not worry about the purity. Gold ETFs are also highly liquid and are an inexpensive way of investing in gold. The capital gains from your investment in gold ETF are taxed as per the existing tax rules.
Senior Citizen Savings Scheme is a post office savings scheme for senior citizens. It is a government scheme for citizens aged above 60, which will aid them in their retirement period. The scheme pays a fixed interest of 8% per annum against the lumpsum investment you make, either individually or jointly. The interest is paid every quarter and gets credited to your bank account.
The minimum investment in the scheme is Rs 1,000, the maximum is Rs 30 lakhs, and the duration of the scheme is five years. You can withdraw your investment prematurely, but you will have to pay a penalty for the same. The investment qualifies for tax deduction under Section 80C, but the interest is taxable as per your income tax slab rate.
The National Pension Scheme (NPS) is a voluntary retirement scheme managed by the Pension Fund Regulatory and Development Authority (PFRDA) and the Central Government. It offers dual benefits of investment and pension. The minimum investment in NPS is Rs 500, and there is no limit on the maximum investment.
NPS invests your money in marketable securities such as equity and debt, and hence, the returns are market-linked. NPS matures when you turn 60, so your investment is locked in until retirement. At the time of maturity, you can withdraw 60% of the amount, which is entirely tax-free. The remaining 40% must be used to buy an annuity plan, which will give you monthly income for a lifetime. The investment in NPS is tax-free, and the monthly annuity income is taxable as per your income tax slab rate.
The Post Office Monthly Income Scheme (POMIS) is a government scheme that helps you earn monthly interest from your lumpsum investment. It pays a fixed interest of 7.4% per annum for a tenure of five years. The minimum investment in the scheme is Rs 1,000, and the maximum investment is Rs 9 lakhs for individual accounts and Rs 15 lakhs for joint accounts.
Your investment is locked in for the entire duration of five years. However, you can withdraw your investment prematurely by paying a penalty. If you withdraw before one year, there will be zero benefits. If you withdraw between the 1st and 3rd year, the post office will charge a 2% penalty, and if you withdraw between the 3rd and 5th year, the penalty is 1%. The scheme doesn’t offer any tax benefits. The investment, interest and maturity benefits are all taxable.
A recurring deposit (RD) is a financial instrument similar to FD. However, in this, you can invest regularly over a period of time and earn interest at the time of maturity. You can invest in RD for a duration of one to ten years with a minimum investment of Rs 25 per month. There is no limit on the maximum investment per month.
Banks offer RDs, and the interest rate varies across banks and durations. Generally, RDs pay an interest ranging from 4%-6.3% per annum. Your investment is locked in for the entire duration of the RD. However, you can take a loan up to 90% of the investment amount. RDs don’t offer any tax benefits, so the investment amount and the interest income are taxable.
Public Provident Fund (PPF) is a government scheme launched to encourage long-term savings. PPF is a retirement plan regulated by the Central Government. The scheme pays a fixed interest of 7.1% per annum on the investment made. You can invest in PPF with an investment as low as Rs 500 per annum. The maximum limit for investment is Rs 1.5 lakhs per annum. If you invest beyond this amount, you will not earn any interest on the additional investment.
PPF has a duration of 15 years, and it is mandatory for you to invest at least Rs 500 per annum until the scheme matures. If you fail to do so, your account will become inactive. Since PPF is a long-term scheme, it best suits long-term goals such as retirement or child education. Your investment is locked in for the entire duration of 15 years, but you can partially withdraw from the 7th year. You can also take a loan of 25% on your PPF balance between 3rd and 6th year.
Once the scheme matures, you can withdraw your investment or extend it for another five years. The investment, interest and maturity proceeds are entirely tax-free as they fall under the EEE (exempt-exempt-exempt) category.
RBI Savings Bonds are debt instruments issued by the Reserve Bank of India (RBI). The minimum investment in them is Rs 1,000, and there is no limit on the maximum investment. These bonds pay a fixed interest semi-annually on 1st Jan and 1st July every year to its investors. The interest rate is 35 basis points above the interest on the National Savings Certificate (NSC). The government, however, announces the interest semi-annually. At present, the interest of RBI Savings bonds is 8.05% per annum.
The tenure of the scheme is seven years, and premature withdrawal is allowed only for senior citizens under certain circumstances. For investors aged between 60 and 70 years, the lock-in period is six years. For investors aged 70-80 years, the lock-in period is five years and above 80, the lock-in period is four years. The interest on bonds is taxable as per the investor’s income tax slab rate.
Unit linked Insurance Plans (ULIP) are financial instruments that give dual benefits of insurance and investment. The premium you pay is divided into two parts: one is for the insurance premium, and the other is for your investments.
The minimum investment in a ULIP varies across plans. However, it can be as low as Rs 500 with no cap on the maximum investment limit. You can pay a premium either in lumpsum or monthly, quarterly, half-yearly, or yearly intervals. Since your money is invested in marketable securities, the returns are market-linked. Hence, ULIPs offer good returns in the long run. The investment qualifies for tax exemption, and the maturity benefit is tax-free.
Initial Public Offering (IPO) is a process where the company sells its shares to the public for the first time. All IPOs in India are regulated by the Securities and Exchange Board of India (SEBI). The minimum investment for retail investors is Rs 15,000 or one lot, and the maximum is Rs 2 lakhs.
To participate in an IPO, you must have a demat account and a trading account. Once you apply for the IPO, the company will allot the shares through a lottery system. If you get the shares, then they will be credited to your demat account, and if you don’t get the shares, you will receive your money back. You can sell the shares immediately on the day of listing or any time after that. The capital gains (if any) will be taxed as per the existing tax rules.
Real estate is one of the most popular investments due to its high return potential. When you invest in real estate, you can earn through rent and capital appreciation. The minimum investment in real estate is very high. However, the volatility in returns is very low, and the returns are high in the long run. Real estate is also an excellent tool for diversifying an investment portfolio. The capital gains from real estate are taxable as per the existing tax rules.
Cryptocurrencies are digital currencies that are stored in the blockchain or online ledger. Over the last few years, they have become very popular due to their high returns. However, they are very risky investments as they are pretty volatile. Not all countries have accepted cryptocurrency as a financial investment. Hence, there is no proper regulatory body for cryptocurrency. The minimum investment in cryptocurrency is around Rs 100. Any capital gains on cryptocurrency are currently taxed at 30% in India.
Real Estate Investment Trusts (REITs) are innovative financial instruments that allow you to participate in the real estate sector with minimum investment. Through REITs, you can also earn regular income in the form of dividends.
REITs operate just like mutual funds. They pool money from investors and invest in real estate properties such as office spaces, warehouses, malls, hotels, and residential properties that generate regular income in the form of rent. The rent is then distributed across all investors in the form of dividends.
The minimum investment in REITs is Rs 10,000 – Rs 15,000, and they can be purchased using a demat account. The dividend that you earn from REITs is taxable as per the income tax rules. If you sell your REIT, then the capital gains are also taxable at 10% (long-term capital gains) or 15% (short-term capital gains).
Corporate bonds are debt instruments issued by companies that have a maturity of more than one year. These bonds pay a fixed interest that is predetermined at the time of issue. The interest is paid either during the term of the bond or at maturity. Corporate bonds rated AAA+ or AAA- are the safest bonds as they carry a very low risk of default. The tenure of the bond can range between 1 year to 10 years and varies across companies.
You can invest in corporate bonds to earn fixed returns that are higher than FDs. Moreover, you can also sell these bonds in the secondary market. The interest and capital gains are taxable as per existing tax rules.
Government bonds are debt instruments issued by central and state governments. They are fixed-income instruments that pay a fixed interest to their investors. Since these are issued by the government, they are considered low-risk investments. They have a tenure ranging from five to forty years and have a very low minimum investment of Rs 1,000.
If you have long-term goals and prefer earning a fixed income with low risk, then government bonds can be your go-to investment. You can invest in government bonds through banks, post offices, brokerage houses, RBI Retail Direct Platform, NSE goBid or BSE Direct platform. Apart from this, you can also invest in Gilt mutual funds and ETFs. Not all government bonds have tax benefits. The investment amount and interest are taxable as per existing tax rules.
Peer-to-peer lending is one of the oldest forms of investment. If you have some money, you can loan it to the ones who need it and earn a fixed interest. This form of lending has been going on for ages. Now, with technology in place, peer-to-peer lending has become even more popular.
In peer-to-peer lending, you can loan a certain amount to a stranger through an application or a website. This eliminates the need for middlemen like banks and non-banking financial institutions (NBFC). Lenders and borrowers have to create an account on the website. Then, the website does background checks on the account holders by checking their credit history and tracking their social media activity and salary. Once the account holder becomes eligible, they can lend or borrow on the website.
Peer-to-peer lending can help earn regular income in the form of interest. However, it can be very risky as borrowers can default on the loan. The interest earned is taxable like any other interest income.
Sukanya Samriddhi Yojana (SSY) is a government of India initiative. It aims to improve the life of a girl child by encouraging parents to invest in their girl child. A parent can open an SSY account for their girl child between the ages of 0-10 years. The minimum investment in the scheme is 250 per annum, and the maximum is Rs 1.5 lakhs. Parents are supposed to invest for 15 years or until the girl child turns 15. The scheme matures when the girl child turns 21. Until then, the money is locked in.
The scheme pays a fixed interest of 8% per annum, which is revised every quarter by the Ministry of Finance. One can withdraw the amount before the maturity period to use it for treatment of the critical illness of the account holder or in case of her death. When the account holder turns 18, 50% of the amount can be withdrawn. The investment, interest and maturity proceeds are all tax-free in the hands of investors as the scheme falls under the EEE category (exempt-exempt-exempt).
Small case is a new entrant to the financial markets. It is a group of securities that is built on a specific theme, strategy, or idea. A small case has around 50 securities carefully picked by SEBI-registered professionals. Examples of small cases are a pharma-based small case or a dividend-paying companies’ small case.
The small case gives investors a readymade portfolio of companies that will allow them to invest in the stock market directly instead of picking mutual funds. To invest in a small case, you will require a demat and trading account. Additionally, you will also require the knowledge of the market. This is because you can manage your own smallcase and eliminate stocks which are in losses.
The capital gains from small cases are taxed just like equity shares. Short-term capital gains are taxed at 15%, and long-term capital gains above Rs 1 lakh are taxed at 10%.
Mid-cap companies are 101st – 250th companies in terms of full market capitalisation in India, as per SEBI definition. Market capitalisation means the number of shares issued by a company multiplied by its share price. Small-cap companies rank 251st and beyond. Mid-cap and small-cap funds must invest at least 65% of total funds in these companies.
Mutual fund ELSS invests at least 80% in stocks as per ELSS, 2005, notified by the Ministry of Finance. Funds created under ELSS have a lock-in period of 3 years.
Liquidity means how fast you can convert an asset into cash in a cost-effective manner.
These funds generate returns by using the strategy of simultaneously buying and selling securities in different markets to take advantage of different prices.