Wednesday, April 8, 2009

Simple Investment Strategy ; It works most of the time

Many people do the work of selecting stocks and they dont know when to buy a stock when to sell a stock and most of the time sell the stock when it is about to rise and they buy the stock when it is about to fall.
Here is one of the simplest investment strategy if you want to make better returns then your FDs.

Investing in the following ratio
1) 50% in NiftyBees (Exchange Traded Fund and underlying asset is Nifty) LARGE CAP
2) 25% in JuniorBees (ETFund and underlying asset is BSE 100 stocks) MID CAP
3) 25% in GoldBees or Gold ETF or Debt Fund

Now when the market rises you can sell equity and buy debt it is called rebalancing the portfolio and when market falls you can buy equity and sell debt and again rebalance it to original ratio.

This is most simple and easy to follow strategy you can rebalance either every month or when the market is very volatile you can see if the ratio are out of order by more the 10% then you can rebalance them.

Many people in the age group of 20 to 35 years can follow the ratio (50,25,25)for Long term investment, however if you are nearing to retirement then you should have ratio (20,5,75)

Most of the peopl can have there version of the ratio according to there risk taking capacity as well are there goals.

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