Grow your money 10 Times in 12-15 Years – Investment Strategy
February 1, 2011
The Indian Stock Market has witnessed 2 Big Bull Phases – Dec-2008 to Jan 2000 and April-2003 to Dec-2007. Our first investment advise came out in Dec-2003, the second phase of the Bull Run. Now are we in the third phase of bull run ? or are we headed for a short term bear market etc are the questions that run on your mind. Irrespective of how global equities behave, you can create wealth in Indian equities.
We have discussed how a 10 to 15 year SIP has already yielded ~30% Compounded returns. However, this time around I am advising investors who can invest in Lumpsum to take advantage of the on-going correction. However, your SIPs should still continue afterthe lumpsum investments.
How much Lumpsum should you invest ? Approximately 30 months of your SIP amount can be invested. If your Monthly SIP is 5,000, then you can invest, Rs 150,000 as Lumpsum [Do it on 5 – 8 occasions when the market Bleeds as Bears Taste Blood]. Your SIPS will Average it out if the Market Falls, otherwise, you will be back in the Green 🙂 What to do if my Lumpsum Investment is over 10 Lakh ? Then send me an e-mail to feedback At DalalStreet.Biz and I will advise a suitable model.
How to Invest in Lumpsum ? Timing the market is very difficult. However, when you are here for a 12 year horizon, every correction in the market must be used as an opportunity to create long term wealth. You can check our advise here. Over the past few months, that is exactly what we have bought for ourselves and our clients as well.
Why are we suggesting Lumpsum Investment ? I believe the next 10 years will be HIGH Growth years for the Indian economy with GDP growth rate of atleast 7.5% and a CAGR of 15% for the Indian industry. Concerns and Local factors will be overpowered by the Hunger for Growth [Will post my views separately on all these issues. Research is done and thus the confidence to share it with you all]. Hence, once the markets begins to discount forward FY12 EPS, it is unlikely that the Sensex will be below 20,000.
Results to Substantiate – I had tested the above theory of investing in falling market during 2008 crash and then averaging with SIP on that Fund in subsequent months. My returns were in excess of what the Fund itself delivered. The Cut should not be as deep as 2008.
When the markets are falling, one doesn’t get the courage, it has happened to me in 2000, 2001 but in 2008 I ventured with some risk and was worth it. Over the years, I have got seasoned and adding to my confidence is the Earnings Numbers and the Strong Research Process followed here. So taking your risk appetite into consideration, decide and call the shots accordingly. Happy Investing!
Questions and Comments are Welcome!