Today’s article is based on the long-term investment strategy that can give you amazing returns if you follow it with discipline.
Often on the internet, we see or read about the importance of SIPs and how important they are to creating long-term wealth, but this long-term strategy that I’m going to share with you is not at all about doing SIP or opting any other systematic investment option. In fact, you will find a lot of strategies about how to invest through SIP on the internet.
This long-term strategy that I am going to tell you is wholly based on the principle that when others become fearful, be greedy and when others become greedy, be fearful. So, without wasting any more time, let us understand the strategy.
In order to execute this long-term investment strategy, you need to understand that this strategy is divided into two parts: one is called a debt portfolio, and the other is called an equity portfolio. The basic idea of this Long-Term Investment Strategy is when the market is too bullish, then, in that case, we will add more funds to our debt portfolio, and when markets are bearish, then we will convert our debt portfolio to a cash portfolio systematically so that we don’t miss an entire downtrend.
Let’s understand this in detail. In order to use this long-term investment strategy, you need to check nifty on a daily time frame with 200 EMA. If nifty breaks 200 ema on a daily time frame, then we will systematically shift our debt portfolio into a cash portfolio on every 500 dips.
There are two main advantages of doing this strategy. First is we will be able to buy good quality stocks at a cheaper rate. ( You can buy ETF’s such as nifty bees, bank bees, or IT bees) and 2nd advantage is that you will average your investments whenever the market dips by 500 points below 200 EMA to average your investments, so whenever the market bounces back, you will get handsome returns on your investments because of averaging.
Now, the question arises what if the market is in a strong bullish trend and it doesn’t come below 200 EMA? Then, in that case, we will keep on adding the majority part of our investments to our debt portfolio. Some amount can be invested in the cash portfolio in order to encash the current bullish trend.
Whenever there is panic like a coronavirus event, then at that time, you can sell your debt portfolio and buy some good quality stocks or ETFs at very cheaper rates.
In order to execute this Long-Term Investment Strategy, one needs courage and discipline because whenever there is panic in the market, we will be buying stocks or ETFs at cheaper rates.
This is how we can execute this long-term investment strategy to generate maximum returns with the help of debt and cash instruments. Please note that the content published in this article is purely for educational purposes.
Please consult your financial advisor before taking any investment decisions. If you like this article, don’t forget to share it with us across all your social media handles.