Penny stocks are often seen as the riskiest corner of the market, associated with low liquidity, sharp volatility and speculative trading. But over the last five years, a handful of forgotten microcaps have delivered extraordinary wealth creation. Data compiled by ETMarkets shows several stocks that traded below Rs 20 in May 2021 have now become Rs 3,000 crore to Rs 12,000 crore companies, powered by themes such as defence, renewables, railways and infrastructure.

For many first-time investors, entering the mutual fund world can feel overwhelming. With constant market updates, social media opinions, and thousands of schemes available across equity, debt, and hybrid categories, investors often struggle to identify where to start and how to build the right portfolio. Financial planners say the key is to focus less on market noise and more on personal goals, risk appetite, and investment horizon.

A similar query came from Ms Saluja, a viewer of The Money Show on ETNow, who wants to know about mutual funds so that she can have some changes done in her existing portfolio and invest rightly.

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According to Nisreen Mamaji, MoneyWorks Financial Services, before making any changes to an existing mutual fund portfolio, investors should first understand the basics of their own financial journey. Questions such as how long the money will remain invested, what the financial goals are, and how much market volatility one is comfortable with are more important than simply chasing returns or switching funds frequently.

“The question is not that do I need to change my mutual funds or are they fine, a more basic question is how long am I investing for, what are my goals, am I comfortable with some amount of volatility if I am invested in the equity markets,” Nisreen said.

She further said to get answers for what is my risk tolerance? What is my investable surplus and where do I see myself five years down the line as far as my salary is concerned.
The investment horizon plays a major role in deciding asset allocation. For short-term goals of one to three years, investors should limit equity exposure to around 30% and rely more on debt-oriented products. For medium-term goals of three to five years, equity allocation can range between 30% and 60%. Investors with horizons beyond five to seven years can consider a higher allocation towards equities for long-term wealth creation.
Nisreen pointed out that many investors make the mistake of choosing high-risk funds like mid-cap or small-cap schemes for short-term goals, which can lead to disappointment during volatile phases. Instead, investors should ensure that the fund category matches the time horizon and risk profile of the goal.
For beginners, starting with relatively stable categories such as large-cap or index funds may be a better approach. These funds help investors gradually understand market fluctuations and build confidence before moving towards riskier segments such as mid-caps, small-caps, thematic, or sectoral funds.

She also cautioned against holding too many schemes within the same category, as this can create unnecessary overlap without improving diversification. Ideally, investors should limit themselves to one or two funds per category and avoid making frequent changes based on short-term market movements.

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Hybrid and dynamic asset allocation funds can also help first-time investors navigate volatility more comfortably. Categories such as balanced advantage funds, equity savings funds, and dynamic asset allocation funds automatically adjust exposure between equity, debt, and arbitrage depending on market conditions, helping smoothen the investment journey.

When it comes to personal finance discipline, Nisreen suggested following a simple 50-30-20 rule. Around 50% of income can go towards essential expenses, 30% towards discretionary spending, and 20% towards savings and investments for future goals.

One of the biggest mistakes investors make, she said, is reacting emotionally to market corrections. Many stop SIPs or redeem investments when markets fall, even though such phases often provide better opportunities for rupee cost averaging. Staying invested and continuing SIPs during corrections can help lower average costs over the long term.

She also advised investors to avoid being influenced by constant market chatter or social media recommendations. Once a strategy is created based on financial goals and risk profile, investors should remain committed to it rather than making tactical changes frequently. Reviewing the portfolio periodically is important, but changes should generally not be made too quickly.

For long-term equity funds, investors should ideally give fund managers at least three years to demonstrate performance before considering major portfolio changes. According to Nisreen, successful investing is often less about timing the market and more about spending enough time in the market with a disciplined and consistent approach.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

If you have any mutual fund queries, message on ET Mutual Funds on Facebook/Twitter. We will get it answered by our panel of experts. Do share your questions on ETMFqueries@timesinternet.in alongwith your age, risk profile, and twitter handle

Bitcoin is trading near $80,000 mark after rejection at $82,500 mark and experts believe the sentiment turned cautious after seeing outflows on Thursday. The cryptocurrency was trading at $80,371 mark.

In the past 24 hours, Bitcoin and Ethereum rallied upto 1.14% and 1.95% respectively. Among the major altcoins, XRP, BNB, Solana, Tron, Dogecoin, Hyperliquid and Cardano gained upto 6.48%.

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Riya Sehgal, Research Analyst, Delta Exchange said Bitcoin stayed mostly flat near the $80,000 mark on Friday after facing rejection around $82,500 and the move also suggests traders are locking in profits following the recent strong rally post which the sentiment turned slightly cautious after US-listed spot Bitcoin ETFs saw net outflows of $268 million on Thursday.

Sehgal further said that Ethereum is witnessing a noticeable change in derivatives positioning, as high-leverage long positions have declined sharply across the market which suggests that many overly bullish trades have either been voluntarily closed or liquidated during recent market volatility.

The global crypto market capitalisation went up 1.35% to $2.68 trillion, according to CoinMarketCap.
Sehgal also said that at the same time, rising US government debt continues to support the case for scarce assets like Bitcoin. While stocks and gold remain the go-to choices for many investors, Bitcoin could still benefit from a weaker US dollar environment.
In the past week, Bitcoin and Ethereum gained 2.76% and 0.73% respectively. Among the major altcoins, XRP, BNB, Solana, Tron, Dogecoin, Hyperliquid and Cardano rallied upto 12.23%.
WazirX Market’s Desk said that crypto markets remained resilient this week despite continued macroeconomic uncertainty and geopolitical tensions and institutional demand continued to support sentiment throughout the week.

Bitcoin’s ability to hold near the $80K mark continues to reflect underlying market strength, WazirX Market’s Desk further said.

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According to Binance Monthly Market Insights, The crypto market rose more than 8% to US$2.6T amid a temporary US–Iran ceasefire. BTC short squeeze drove prices toward US$80K, while the prolonged war continues to fuel stagflation risks. ETF inflows doubled with sentiment in neutral territory.

The report further said that in April, the total cryptocurrency market capitalisation rose more than 8% to US$2.6T, driven by a temporary US–Iran ceasefire, with digital assets showing remarkable resilience amid prolonged geopolitical uncertainty.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

If you have any mutual fund queries, message on ET Mutual Funds on Facebook/Twitter. We will get it answered by our panel of experts. Do share your questions on ETMFqueries@timesinternet.in alongwith your age, risk profile, and twitter handle

Nithin Kamath has once again sounded the alarm on common personal finance mistakes, saying Indians continue to fall into familiar traps such as ULIPs, endowment plans and poorly understood health insurance policies despite years of awareness campaigns and easily available financial information.

In a post on social media, the Zerodha founder said there is “very little creativity” in the mistakes people make with money, especially when it comes to mixing insurance and investments.

Kamath pointed out that financial influencers, media platforms and finance experts have repeatedly warned against products such as Unit Linked Insurance Plans (ULIPs) and traditional endowment policies, yet sales of such products continue to rise.

According to him, the problem is no longer a lack of access to information. Consumers today can easily compare products online, run calculations, watch explainer videos or even use AI tools like ChatGPT and Claude to understand the hidden costs and weak returns associated with bundled insurance-investment products.

“Even a cursory Google search will tell you the problem,” Kamath said, adding that AI tools can now explain the math, hidden catches and better alternatives within minutes.

He argued that unlike health insurance – which often contains complex clauses around waiting periods, exclusions, room rent caps and settlement conditions – ULIPs and endowment plans are relatively easier to evaluate, making repeated mis-selling and poor decision-making harder to justify.
Kamath said health insurance deserves more sympathy because many policyholders only discover restrictive clauses at the time of claims, forcing them to pay significant amounts from their own pockets despite having coverage.His comments come at a time when retail participation in financial products has surged sharply, driven by social media awareness, fintech penetration and easier digital onboarding. However, financial experts have repeatedly cautioned that product complexity and aggressive sales tactics continue to push investors towards expensive or low-return products packaged as “safe investments” or “tax-saving solutions.”

ULIPs combine insurance with market-linked investments, while endowment plans typically offer life cover along with guaranteed savings components.

Critics argue that both products often carry high costs, lower transparency and weaker long-term returns compared with buying pure term insurance and investing separately through mutual funds or other market instruments.

He also shared a video on mistakes usually made by people that suggested ways to rectify these mistakes.

(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)