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POSTED BY ON May 13, 2013 6:25 pm COMMENTS (5)
Hi,
This question is related to wealth creation. I often hear that we should keep churning our portfolio for profit booking and then reinvested the whole into more profitable funds. Does it mean that if say my expected retunrs from the funds is 10% and if that is achieved then I should redeem it, then again invest in the same funds after it goes down or invest in some other profitable funds? Is it a relastic scenario and achiveable? Beacause i think without these wealth creation is not possible?
i would also like to share my experience in share trading.. just for learning purpose I invested few thousands into shared some a year ago.. just few days ago i remebered (!) that I had invested into some shares and I went to checkout their performance and I found all were in red. but when I check the performance of the stocks (3 in numbers) for over past one year I found that it did went to my desired percentage of return quite a few times in that one year but I didnt took that chance to redeem it. Thats when I realized that I should not invest and forget but monitor it until my desired returns are achieved.
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what you relate your experience with direct equity share trading/investment to equity mf investment is not correct. for direct equity share trading /investment you need to choose the scrip/company , estimate its performance over a period , time frame , target price etc. etc., whereas for equity mf , we have only select the mutual fund and leaving all other matters to the fund manager .we have to observe the performance over a period compared to the underlying index and the peers , and to change the fund ,if it performs below some pre decided limits , or when it achieved the goal target or at the most for balancing the overall portfolio. profit booking should not be the cause of changing it.
Dear Rajan, what ‘ll you acheive by this frequent churning of your portfolio? Say instead of 18 or 24 months, the return is already with you in 8 months, what ‘ll you do now? what ‘ll be your take on the taxation eating into your portfolio churning? What about the long term wealth creation?
thanks
Ashal
The simplest thing to do is to learn what rebalancing is, why do it and what are the benefits:
Here is one starting point:
http://freefincal.wordpress.com/portfolio-rebalancing-simulator/
Dear Rajan, do it at your own risk ‘ll be my plain advise.
thanks
Ashal
Ashal,
please make me understand what’s risk is there in this.
Thanks,
Rajan