Hi, I started my financial journey last year and reached my first milestone of 10 lakhs
Parag Parikh Flexicap, SBI Multicap, ICICI Flexicap, HDFC Multicap, Kotak Multicap, Axis growth opportunities, Mirae Tax saver, Canara large and midcap – 1 lakh each – Totally 8 lakhs
(No SIP’s, mostly buy on dips, whenever nifty comes down 1000-1500 points from all time high)
Invesco Arbitrage Fund – 1 lakh
Navi bond – maturity on Nov 2023 9.5% returns- 1 lakh
Now going forward i am getting confusion,
- whether to continue with these active funds or will go for index funds?
If I would be in your place, I will only keep two mutual funds, both index funds. 1 sensex index fund and 2nd Nasdaq100 for index fund. That’s enough.
And yes buy on dips is good way to invest but it’s called reversed averaging and it’s wrong approach in investing. Instead try averaging on upside. It will give higher capital allocation and growth in long term too…
That’s it.
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Why it’s a wrong approach to investing? I think it’s a best when you buy on dips. It is just little active than regular SIP.
I understand my friend,
In early part of my investing journey, me too thinking the same but with time my understanding is upgraded my thought process changed and I am sure, at some point in time you will also realise this that “buy on rise” is the secret of wealth creation and not buy on dips.
All the best👍.
If buying on dips is wrong strategy, then buying when price is rising is also a wrong strategy. All depends on the stock which you are going to buy and how long you are willing to hold the same. If the stock which you are buying is fundamentally strong, the best strategy is to buy on dips.
The entire IT pack, no one wants to buy the same now. To me, this is the best time to accumulate. Banking stocks are at a all time high (few of them) and time to book some profits. Will not buy them now.
Example: Federal Bank went upto 140 and now at 129.
Few days back, HDFC went upto 2864. Those who followed the strategy of buying on the rise, was truly surprised the very next day it fell by 108 INR or so.
Same thing applies to Nifty 50 ETF, if you do not buy on dips when will you accumulate. Buying on the rise is great if you are a short time investor who wants to buy when the stock is rising and then dump it when it reaches your predetermined price level.
Notwithstanding the above, I do agree to your point of buying on the rise, if you are not aware of the stock or something really bad is happening. It happened to me, with Yes Bank, and was invested, when the stock price was falling, I was buying thinking of averaging. It did not work. I had something similar called 3i infotech same tragic story.
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Depends on what you are looking at.
If you are looking at a target corpus, with a time period in mind, and if your funds have given a return which you think will continue to come in the future too, and if you will reach that corpus in the time you have, then you can continue with your funds.
If you are not looking at a corpus, don’t have a time period in mind, then you can take a chance by looking at the options you have.
As active funds are manged actively, they don’t fall the same as index funds, downside protection exists. So one reason given for choosing active funds is not for the more return than index funds, but for the lesser fall they have compared to index funds.
Plan first, then products.
honestly buying on dips & buying on rise will not help !
you need “buy before the rise” strategy – only very few people can use this strategy though
Or the best one, buying at that lowest tick before rally.
Its like catching ninja h2r by platina
i do not invest in Mutual fund that much and ETF i still dont understand but its commendable you increased your capital. i invest in a stock thats showing good current rise with respect to market and overall when the market cycle is up. you can continue with 4 funds that have potential and invest the remaining at the start of a ralley.
Depends on your time horizon. If you are just a momentum investor then buy on rise works. But if you are planning to hold it for at least 10 years then buy on dips work.
Here the OP mentions that he is an a long term investor looking to create wealth. So in my opinion buy in dips suits him the best.