Small Cap Stocks Compare

Additional Useful Information

• An investor can buy “Shares” of these stocks. These shares can be purchased at a price which is called the “Share Price”. The price of these shares keeps changing daily.

• The investor can sell these shares anytime at the share price prevailing on the day of the sale.

• Total Purchase Amount	=	Number of Units X NAV as on the day of purchase
  Total Sale Amount	=	Number of Units X NAV as on the day of sale
  Total Gain	=	Total Sale Amount – Total Purchase Amount

• Small Cap Stocks are considered a good investment option over the long term (more than 5 years).

Returns *

• Small Cap Stocks do not guarantee any returns. They are subject to market risks.

• Investment in small cap stocks can generate returns for the investors in two forms -
• The first source - When investors sell their securities, the difference between the Sale Amount and Purchase Amount is typically called “Capital Gain” or “Capital Loss” (if sale amount is lesser than the purchase amount).
• The second source - Dividend payments.

• Small Cap Stocks have the potential to generate above average returns over a long holding period.

• Returns depend on and vary between individual stocks and can be potentially higher than Large and Mid-Cap Stocks.

Risk Level

• Small Cap Stocks are categorized as high-risk investments since they invest in the equity stock market.

• They are the riskiest of all the types of stocks in the stock market.

Liquidity

• When an investor sells shares of these stocks, the sale amount will be paid to the investor in 2 working days.

• Relatively less liquid as compared to Large Cap Stocks and Mid Cap Stocks.

Interesting Facts

• Small Cap Stocks are companies beyond the top 250 companies based on their Market Capitalization.

• Small Cap Stocks typically have a higher price fluctuation as compared to Large Cap Stocks and Mid Cap Stocks.  

Tax Implications

• Earnings received from Small Cap Stocks are taxable.

• When investors sell their Small Cap Stock Shares, the difference between the Sale Amount and Purchase Amount is typically called “Capital Gain” or “Capital Loss” (if sale amount is lesser than the purchase amount).

• The tax that the investor must pay on Capital Gain is –
• Situation 1 – If the Small Cap Stocks are sold within a period of 2 years from investment, the Capital Gains earned (called Short Term Capital Gains) are taxed at 20% of the gain.
• Situation 2 - If the Small Cap Stocks are sold after a period of 2 year from investment, the Capital Gains earned (called Long Term Capital Gains) are taxed at 12.5% of the gain.

• There is no tax in case of “Capital Loss”.

• For any dividend received by investors from Small Cap Stocks, these amounts are added to their total taxable income and tax is required to be paid as per the tax slab.

Where To Invest

• Small Cap Stocks - Best Small Cap Stocks To Buy Today - 5paisa | 5paisa

• Small Cap Stocks | List of Top Small Cap Stocks | Small Cap Stocks in India (moneyworks4me.com)