Calculator for SIP returns
Don't forget to consider the entry load on SIP when entering the monthly contribution amount. For example, if you invest Rs 1000 p.m. (Enter only 1000- entry load as monthly contribution).
Just a thought
I was chatting with my neighbour, a couple of days back. He is not an equity investor. He was telling that the bull run was not at all justified and the markets are highly overpriced. When there is no change in earnings of companies in the past three months, how can the market shoot the roof?.
Definitely a logical question!!. My neighbour had booked a flat in 2006 for a huge amount of money. The flat would have cost only half of it, had he booked it in 2005. I asked him , when the rent in the place has been stable ( similar to earnings of the shares), how can the market value of house double...( the appreciation he expected on his flat is not happening now..that's another story....).
He did'nt have any answer too. Stocks are definitely expensive now but the flats are more expensive at P/E's exceeding 200!!.
May be , stocks will be driven more by liquidity than the fundamentals like the real estate. So, retail investors should follow a systematic investment plan to overcome the bumpy rides. Don't stay away from equity, but take the SIP route to benefit from volatility....Enter equity only if you can stay for long in the market ...(> 5 years).
Wondering what to do in a volatile market?? read this
Over the long run, equities have been known to outperform most other asset classes, yet rapid changes in stock prices, whether upwards or downwards, may tempt investors to exit the market, and deviate from their long-term financial plans. However, history suggests that staying invested in the market through volatile periods can be beneficial in the long run, as demonstrated by the following chart :
The data demonstrates that an investor who, through attempting to time the market, misses just the ten best days of market returns in the last ten years, will make considerably less than one who remains invested through volatile periods. This also demonstrates that volatile periods can account for a large part of upward changes in market levels. While it is uncertain whether the current upswing in market levels is sustainable in the short-term, for the medium-term, there have been no changes in economic fundamentals, which remain positive. India’s economy is still fore casted to grow on track, with FY08 forecasts ranging from between 8% to 8.5%. In this volatile market, the Systematic Investment Plan (SIP) method continues to be a viable way of investing in stocks through a professionally managed mutual fund, regardless of current levels. It is also important to distinguish between the run-up in the Sensex (to a great extent driven by just 5 out of the 30 stocks in the index), and the situation in the broader market, where there continues to be long-term stock picking opportunities that active fund managers can capitalise on.
The data demonstrates that an investor who, through attempting to time the market, misses just the ten best days of market returns in the last ten years, will make considerably less than one who remains invested through volatile periods. This also demonstrates that volatile periods can account for a large part of upward changes in market levels. While it is uncertain whether the current upswing in market levels is sustainable in the short-term, for the medium-term, there have been no changes in economic fundamentals, which remain positive. India’s economy is still fore casted to grow on track, with FY08 forecasts ranging from between 8% to 8.5%. In this volatile market, the Systematic Investment Plan (SIP) method continues to be a viable way of investing in stocks through a professionally managed mutual fund, regardless of current levels. It is also important to distinguish between the run-up in the Sensex (to a great extent driven by just 5 out of the 30 stocks in the index), and the situation in the broader market, where there continues to be long-term stock picking opportunities that active fund managers can capitalise on.
Source - Fidelity AMC Newsletter
The great fall is here ( Smart recovery later on)
"The Sensex has plunged by 1500 points to 17,500. The Nifty has crashed by 500 points.
The trading has been halted for an hour. The trading has been halted for the time since May 2004".
The trading has been halted for an hour. The trading has been halted for the time since May 2004".
Something BIG as expected has happened and now we are seeing this feat repeated by FIIs again and again. Only way to get away with this is prudent systematic investment. Domestic investors should get more muscles than FIIs. It will be a long time before this happens.
Sensex recovers smartly by end of day... down only by a small percentage. !
Returns proportionate to index
One of my friends was asking me . How to get returns in proportion to index ( Sensex/ NIFTY,etc).?
The simplest answer would be buy the index stocks in the same proportion that the index is made of . You can also choose to invest in index funds which try to closely track the composition of index in their portfolio.
There are also exchange traded index funds like NIFTY BEES , JUNIOR BEES and so on. These ETFs can be bought and sold just like stocks.
I know a friend of mine who is used to buying units ( very small quantity) from such an ETF every week (cost price averaging). He would also do value cost averaging by buying more Index fund ETF units on the day when ETF falls apart from his regular buying. This has helped him a lot and he is sitting on huge profits when the sensex is at a great height now....
Sounds like a smart strategy..you can try it out too!.
ETF- Exchange Traded Funds.
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