Question

why do the small investers earn less in the market?

Answer 1

Mid- and small-cap stocks have taken a severe beating in the past few months, resulting in losses for funds that had lined their portfolios with stocks from these segments.

Jittery investors, who started SIPs in these funds within the last year and are now staring at losses, may want to discontinue their investments. Experts say this would be unwise. This is precisely the time when SIP investors will be able to make the most of the volatility by effectively fetching more units at lower prices for the same amount. “You need to give a few years to any fund. If you are investing for 10 years and are in the right funds, then invest as much as possible,” says Vipin Khandelwal, Founder of Unovest.

When the mid-cap segment regains strength, investors who persisted with their SIPs will stand to benefit. Over a period of time, SIPs will average out your cost and generate inflation beating returns. This is the simple key to building wealth. For mutual fund investors, regular investing is a better strategy than timing the market. An investor who continues his SIPs irrespective of market movements is likely to make more money than one who lets market sentiments affect his decisions. For instance, if a mutual fund investor had stopped his SIPs or withdrawn his investments after this year’s Budget announced the LTCG tax on equities, he would not have gained from the rise in the market in the past six months.

Answer 2

small investers invest less in market and are secure himself for large loss so if market up they earn less.