National Stock Exchange of India - Wikipedia

In this article we discuss basics of investing, understanding market capitalisation and allocation between large cap, mid cap and small cap stocks. Differences between Large caps, Mid caps and Small caps When understanding how to allocate funds for investing in equities, it is important to understand both your expectation of return a function of your financial goals and also your risk appetite.

Once you are clear on these, it will be a lot easier for you to allocate money between the various categories of stocks. In the first article, we understood the basic fact that investing is essential for achieving your financial goals.

Now, let us step forward and understand the three categories one has to pick from for one's portfolio. Understanding 'Market capitalisation' There are three main classifications when it comes to stocks - Large Cap stocks; Mid Cap stocks; and Small Cap stocks.

Here, the term 'cap' simply refers to the 'market capitalisation' of the stock. And what is market capitalisation?

It is the value of the stock that you arrive at by multiplying the stock price by the company's outstanding number of equity shares. In your view, does asset allocation help?