Personal Finance
Top 5 Reasons Why Small-Caps Make Better Investments Than Large-Caps
By My Route To Financial Freedom  •  January 17, 2016

People often ask me why do I invest mainly in small-caps. When I reply, “why not?” I get the following answers:

  • Penny stocks are risky! I will only invest in the more stable blue chips (large caps)!
  • Smaller companies cannot beat the MNCs!
  • The small fries are first to get wiped out during a recession, interest rate hike, etc.
  • Small-caps have poor liquidity! It’s so hard to get in and out  because the spreads are so large!
  • Too much corporate governance issues! What if there’s fraud? Look at ABC Ltd (Referring to an S-chip)!

While the above points are valid to a certain degree, it is because of such widespread negative reputation that small-caps have that allows considerable money-making opportunities to go unnoticed.

I believe that as an asset class, small cap is one of the most widely misunderstood and underinvested among investors. Here are the top 5 reasons why I believe small-caps ...

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By My Route To Financial Freedom
Aloysius Lee, co-founder, is currently pursuing a degree in Business at Nanyang Technological University (NTU) and is the President of Investment Interactive Club 17/18. He graduated from Singapore Polytechnic (SP) with a Diploma in Banking and Financial Services. During his course of study, he was awarded the SB Business School Achiever Award, UOB Kay Hian Scholarship and Phillip Futures Prize ...
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