It's almost immposible to "buy at dips" via SIP if you don't have interactive broker which provide addtional investments on SIP in-between due dates. However one can choose index funds as our main view is not diversifying portfolio but taming and timing the falls and rises. 1 such fund is IDFC Nifty. HDFC Sensex Plus/JM Nifty can also be used though your first investment requires 5000 in later 2 while IDFC nifty requires just 500.
08/06/2011 Additional Investment 500.00 10.4810 47.705 47.705
10/06/2011 Additional Investment 500.00 10.4174 47.997 95.702
15/06/2011 Additional Investment 500.00 10.3457 48.329 144.031
20/06/2011 Additional Investment 1,000.00 9.9912 100.088 244.119
On 8th Nifty closed at 5526, 10th it was down 1% closed at 5485, 15th 5445 and 20th 5257.90 almost 250 points from initial investment. Now NAV stands at 10.42 and on investment of 2500 returns are 2545 or rs 45 profit that comes around 1.75% without any exit load.
Now I've option of taking 2500 out and keeping units worth 45 with me or redeeming full amount. The same I did with HDFC mid-cap and SBI Magnum equity. SBI Magnum equity is up by 2.52% and HDFC mid-cap by 2.67% but they'll attract exit load hence it'll be back to square one, around 1.5% returns.
One should have deep pockets to put money on every fall. What if Nifty didn't go up by 3% on friday and fell by 3%? I was to arrange almost 3000 each fund to average out the navs! As market goes down further amount to pour in increases. One can't put same amount on 1% fall to average out. Hence to catch dropping knife is dangerous and should not be attempted until one is expert and have patience, money and can track funds on regular basis. One will get good returns in short as well as long run. A catch on 1% fall or 10% fall makes no difference until market rises to our entry levels and till that time it's almost risking like equity. The risk return pay off is high here in compare to equity as your set of shares in portfolio may rise or fall but in long run it'll only rise if not today after 2 years.
08/06/2011 Additional Investment 500.00 10.4810 47.705 47.705
10/06/2011 Additional Investment 500.00 10.4174 47.997 95.702
15/06/2011 Additional Investment 500.00 10.3457 48.329 144.031
20/06/2011 Additional Investment 1,000.00 9.9912 100.088 244.119
On 8th Nifty closed at 5526, 10th it was down 1% closed at 5485, 15th 5445 and 20th 5257.90 almost 250 points from initial investment. Now NAV stands at 10.42 and on investment of 2500 returns are 2545 or rs 45 profit that comes around 1.75% without any exit load.
Now I've option of taking 2500 out and keeping units worth 45 with me or redeeming full amount. The same I did with HDFC mid-cap and SBI Magnum equity. SBI Magnum equity is up by 2.52% and HDFC mid-cap by 2.67% but they'll attract exit load hence it'll be back to square one, around 1.5% returns.
One should have deep pockets to put money on every fall. What if Nifty didn't go up by 3% on friday and fell by 3%? I was to arrange almost 3000 each fund to average out the navs! As market goes down further amount to pour in increases. One can't put same amount on 1% fall to average out. Hence to catch dropping knife is dangerous and should not be attempted until one is expert and have patience, money and can track funds on regular basis. One will get good returns in short as well as long run. A catch on 1% fall or 10% fall makes no difference until market rises to our entry levels and till that time it's almost risking like equity. The risk return pay off is high here in compare to equity as your set of shares in portfolio may rise or fall but in long run it'll only rise if not today after 2 years.
