Long term wealth creation with minimum intervention

[vivektrader]

Few important takeaway points from the table above:
1. Nifty midcap 150 momentum 50 gives the best and most consistent returns over long period of time.
2. Notice that 2024 was an exceptional year, if we exclude this year (a similar one may not come soon), all other strategy indices suffer in returns.
3. All strategy indices outperform Nifty and Banknifty.

 

[vivektrader]

Volatility and Drawdowns
Most of the strategy indices (and therefore the funds based on them) have very high volatility.
How much ....20-25%
whats the risk : Your BP may fluctuate seeing wide variations in NAV in any given year (or day), but sit tight........why......because churning is inbuilt in the strategy index where low momentum or non-performing, losing stock will be weeded out making way for ones that are moving well. This churning happens every 6months by NSE itself. So don't take volatility to you heart.
Use Volatility as an opportunity to add.
Drawdowns
When momentum stocks correct, they beat the market in that too, corrections are sharp and exaggerated.
For example in covid fall when nifty fell 40%, this index (and fund) fell >70%
That will not be the time to liquidate but sit tight, keep convection, because unlike stocks which can go to 0, this fund that churns out under performers does bounce back when market sentiment (and sanity) improves (and it did both after 2008 and 2020)

 

[vivektrader]

So whats the plan?....
Is now the time to enter big.......Sure NO
Wait for a 10 - 20% correction in Nifty.
However if someone wants to add small positions every week or fortnight..any time is good to start
I would wait for a sequential buy 13 in any of major indices like Nifty/Nifty200/Nifty Midcap150

When to Add
Add at every 15% fall in fund NAV or in deeper corrections at index buy 13s.

When to sell
I won't like to sell as the portfolio of this momentum based fund will keep on camouflaging based on what stock/sector amongst Midcap 150 universe is moving and the goal is Wealth creation

 

[vivektrader]

When we compare stock universe for their returns over long period, midcap index has the best outcome, thats why we are picking momentum stocks from this universe (in the form of fund).

 

[vivektrader]

Index funds have low expense ratio in the range of 0.2 to 0.4% so no problem there.
I would prefer an ETF based on Midcap 150 momentum 50 index, as we can buy the same just like any other stock (it hasn't been launched yet (likely soon).
In the meantime we have two AMCs which have direct growth option mutual funds to replicate this index: TATA and Edelweiss
One can go through their sites for details

 

[Smart_trade]

Very good thread on wealth creation which is the final aim of all we traders and investors...hoping that the discussion will follow and more ideas would emerge.

 

[kajalnigam]

Very good thread on wealth creation which is the final aim of all we traders and investors...hoping that the discussion will follow and more ideas would emerge.

Agree with you

 

[timepass]

How would define "wealth" ??

 

[vivektrader]

How would define "wealth" ??

Any sum of money/assets that allows oneself to attend to financial obligations of one's dependents and that also assures a dignified life for himself and his better half in later phase of his life .....that's the bare minimum goal that defines wealth.
Anything more and one can help the society around him (the less fortunates), that's even better. In my humble opinion the wealth should come without unnecessary stress, howsoever slow....but sure.

 

[Smart_trade]

Wealth is a relative concept. For some a person having Rs 1 Cr is wealthy, for some it is 5 Cr and for some it is 10 Cr and above. It also varies with the social strata we belong to, the town/city or Metro City we live in so there cannot be one universal defination.

For most people wealth is having a 2/3 Bedroom house free of any liability and enough savings/financial assets which when invested will give us 3-4 times our monthly expenses needs plus a large emergency,travel and medical contingencies fund. .In short it is amount which will make us not worry about earning anymore ( though we keep doing it as an occupation or love for our profession). After this level is achieved, then the surplus is just figures in our bank accounts and that is the time when we have to start helping less fortunate people in the society with the abilities which the God Almighty has given us. With this amount we can live a comfortable life for the family and also give good start to the next generation.