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POSTED BY ON October 3, 2011 2:50 pm COMMENTS (6)
The basic of investing is buying low and selling high.In other words to time the market.But we small investors neither have the time nor the expertise required.So, I stick to monthly SIPs.The virtues of SIP are discipline and cost averaging.I don’t have to think about timing and neither have to organise my financial life regularly.
But what about doing lump sum investment in a down market and if I have the extra cash?Of course, I mean in addition to continuing SIPs.
Present market conditions are bleak and it is rumoured to remain so for about a year or two.All the indecies are down 1.5%-2.5% down the moment I am writing and it has been doing this for a while.So I think of investing 5K in Franklin India Bluechip Fund(G) and 5K in HDFC Top 200(G) in this week if market continues to fall and of course NAVs continue to fall.I have both the funds in my portfolio so I need not to do extra job of tracking.
Jago Investor has always been helpful to me and I hope to have the same favour in future.Please, advise me.
Thanks in advance.
Regards,
Trishit Ray
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Dear Trishit, Let’s calculate for an example. You are investing 5000 Rs.for a NAV of 186 Rs. & 183 Rs.
Units allotted @ 186 = 5000 / 186 = 26.881
Units allotted @ 183 = 5000 / 183 = 27.322
From the above example, the extra units on a lower NAV are 0.44 only. Now please do tell me how much extra money you can make out of these 0.44 extra units?
Remember greed of timing the market is the biggest enemy of a common investor.
Thanks
Ashal
Dear Trishit, As you are going to invest in your existing plans, the fall of 2-3 Rs. ‘ll not make any difference for the long term, the reason is simple for that fall – you are already investing through your regular SIPs.
Thanks
Ashal
Dear Ashal,
Greetings.Good see you.
Actually, market had been going down and down and I had some extra money so I thought of investing.Market just had some +ve movement but generally, it is still down.I still think lump sum investments in mutual funds are better if done in a bear market.Yes the market may still go down in already bear market but if the investment is done in a bull market the cost will certainly be higher.I say this about lump sum investment only not for sip.Please, correct me if I am wrong.
You are right that as I was going to invest in funds that I already have sip with NAV difference of Rs.2-3/- does not matter.I invested on 04.10.11.
Regards,
Trishit
@ Trishit Ray
All i am saying is you can invest any time if it is for long term a NAV difference of Rs 2-3 will not make a major difference in long term(7+ years) even if its lumpsum as long as the investment is mapped to your goal.
Its not a bad idea to put in extra money that you will not need for long term anytime into the MF(as long as your long term is 7+ years)
In current scenario we cannot say we are in bottom. Only thing you should consider before putting in the money is if the market crumbles another 15% down from here will you be alright with it.
If you don’t bother about short term oscillations and losses then go ahead and invest anyday you have surplus
Thanks TheZionView for your reply.You are right that we can not be sure if we reached the bottom or not.But we can say for sure the stocks of good large cap companies are considerably low.It may or may not come down further.I am no expert.
I won’t need the money in near future.Yet, do you think I should wait for few days or invest now as “anyday”?
I may sound too greedy but I think a Rs.2 or 3 difference in NAV when we buy matters in lump sum investment.And if market falls a bit further in the coming days it is possible that NAVs also come down.What do you think?
Regards,
Trishit