Is this the right time to add a small-cap fund to our portfolio?
As I have said earlier, if you have a long-term horizon, you can choose one or two good funds and if you are experienced, then start your SIP, don't invest lump sum. While investing in small caps, have a time frame of at least seven to ten years. Also, you need to have a strong stomach because of the kind of fall that you would see in a brief period of time in small caps and you will probably get two such occasions in a holding period of ten years.
So, will you be able to withstand that when you see your investments going down in value by 50 per cent in one month's time? Will you be okay during those times? You may say you may be fine, but saying it is one thing and experiencing it after you have actually invested your money is a completely different thing. So, just be aware of that while deciding to invest in small caps.
