A new year is looming and everyone must be making new resolutions and promising to themselves that this time, they will make sure they fulfill their vow. For an investor, the resolution is the same - will strive hard to make more money in 2020. So, for people out to invest their hard-earned money in an attempt to earn huge profits, what it all boils down to is a choice - small-cap vs mid-cap vs large-cap mutual funds. This is of utmost importance for those doing their retirement planning. Check out the most important aspects of investing and a top fund - SBI small-cap.

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The principles of investment are simple. Those who have a high-risk appetite make investments in equity markets directly. However, those who have a lower risk appetite, turn to mutual funds. That is the reason why mutual funds have emerged as an important investment tool. But, mutual funds have various categories - small-cap, mid-cap, large-cap and multi-cap. Therefore, choosing the right category for achieving one's investment goals is very important. According to the tax and investment experts, retirement-oriented investment is a long-term investment goal and hence one should go for the small-cap mutual funds if his or her risk appetite is high. Greater the risk, the greater the potential to earn more and more money!

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Elaborating upon the role of time-horizon in mutual fund investment, Kartik Jhaveri, Director - Wealth Management at Transcend Consultants said, "Selection of the mutual fund category depends upon the time-horizon and risk appetite of the mutual funds investor. If someone is investing for retirement, then the investment goal falls under the long-term time-horizon and hence small-cap mutual funds would be the ideal choice for the mutual fund investor, provided, his or her risk appetite is high." 

Jhaveri said that if the investor's risk appetite is not that high, then he or she can go for multi-cap mutual funds, mid-cap funds or large-cap funds respectively, as it involves risk appetite in descending order from multi-cap to large-cap as mentioned earlier.

Speaking on retirement-oriented investments, Balwant Jain, a Mumbai-based tax and investment expert said, "Retirement has two phases. One is the accumulation phase and the other is the utilisation phase. It is the accumulation phase during which you can invest in small-cap funds provided you have the required risk appetite and risk-taking ability. However, once you have retired, though your retirement utilisation phase lasts almost as long as your accumulation phase, you still may have the risk appetite. However, generally, risk appetite goes down with passing of years, but your risk-taking ability becomes almost nil after you have retired. So, your ability to earn comes to almost an end and thus, you cannot take any risks."

Batting for small-cap mutual fund investments strictly for achieving long-term investment goals, Jain said that investors must not chase returns and get into small-cap mutual fund schemes for the short-term. That is a sure way to lose money. "Choose small-cap mutual fund schemes if you have a long-term investment horizon and a high-risk appetite. Continue with your investments or hold them for a long term to earn big returns," said Jain.

Asked about his favourite small-cap mutual fund Jain said, "My favourite small-cap fund is SBI small-cap, which was earlier known and SBI small and midcap fund."