Hello Toocool,
There is no plan B. We are convinced that buying in a crash ONLY is the only way to go forward. Once that happens and till the market remains in the buy range and you have exhausted all your funds, you keep doing a SIP in stocks till the buying favours. a point will come when no more buying is allowed where you stop doing the SIP in stocks and start buying FDs.
To sum it up
1. Check market valuations.
2. If market is expensive keep doing FDs every month.
3. When buying favours, buy the short listed stocks from the money that is allocated in FDs at various intervals as per the valuations. This typically happens in nifty PE range 10-12
4. When the entire pool of money is invested in stocks and still buying favours, to SIP with that portion of the money you earn every month from salary which you will allocate to stocks. SIP can be done till nifty PE is under 15.
5. When the PE goes above 15, stop the SIP and start the FDs.
6. When the valuations reach unbelieveable levels (typically above nifty PE of 25) sell the portfolio at various levels and park the entire money in FDs and wait for the next crash.
7. You will not know when the next crash will come, you just know that it will come. Till that time, you earn FD returns instead of savings returns which are peanuts.
8. Just like Amit, I have been waiting for the past 4 years to enter stocks and the FD amount is growing but I am not bothered.
my 2 cents
Regards,
ptk
There is no plan B. We are convinced that buying in a crash ONLY is the only way to go forward. Once that happens and till the market remains in the buy range and you have exhausted all your funds, you keep doing a SIP in stocks till the buying favours. a point will come when no more buying is allowed where you stop doing the SIP in stocks and start buying FDs.
To sum it up
1. Check market valuations.
2. If market is expensive keep doing FDs every month.
3. When buying favours, buy the short listed stocks from the money that is allocated in FDs at various intervals as per the valuations. This typically happens in nifty PE range 10-12
4. When the entire pool of money is invested in stocks and still buying favours, to SIP with that portion of the money you earn every month from salary which you will allocate to stocks. SIP can be done till nifty PE is under 15.
5. When the PE goes above 15, stop the SIP and start the FDs.
6. When the valuations reach unbelieveable levels (typically above nifty PE of 25) sell the portfolio at various levels and park the entire money in FDs and wait for the next crash.
7. You will not know when the next crash will come, you just know that it will come. Till that time, you earn FD returns instead of savings returns which are peanuts.
8. Just like Amit, I have been waiting for the past 4 years to enter stocks and the FD amount is growing but I am not bothered.
my 2 cents
Regards,
ptk
However, if one has purchased correct stocks, then even while Index looks overbought some of your stocks will continue their upward journey, due to their ever growing EPS, Free cash flow (owners earnings) etc. Knowing the qualify of each stock in ones portfolio becomes important.