Hellow to everyone, its been long since our last post. But we are back with new information on right time, its the time of budget where market fluctuates for temporary period on the basis of announcements made in budgets.
Every year government announced some role map for upcoming financial year and on that basis many announcements are made. So this directly related to sentiment of common people if people like the budget than market goes up and vice versa. But how we will be able to determine how market will perform as i told earlier market is driven by many factors so now what to do and how to get the maximum opportunity out of thia budget fluctuations.
Some may say go and purchase top fund which will perform in any situation and some say wait for budget and on the basis of announcements we can decide further action. I personally believe its the short term opportunity one who is looking for short term gain can do such type of thing, but if you are looking for long term that its better to avoid the trade in such a period which can go any side.
The most important thing is to take the advantages if we are seeing any big up or down. Got confused we will see next what i want to say: see if you have goan through my old Blog i have explained you the benefit of average , the same thing we can do, take for an example if market goes down say by 1 percentage in a single day we can take that opportunity to make an average price.
Now lets understand what is benefits of average,
Say for an example you have done deep research on 1 particular fund and believe that the performance over long term will be good for sure but due to some outside pressure like trade war, unsatisfactory budget etc the price of funds unit is low. We can accommodate the units of that fund at lower price in small small quantities and which will help us to avoid the large difference of funds valued and market value. Say you purchase 1 unit at rs.5 on today, next day price false to rs. 4.5 and you purchase 1 more unit total holding comes to 2 units at price of rs. 9.5 and average rate per unit will be rs. 4.75 say after 1 month price come back to rs. 5 and sold both the units your selling price will be rs. 10 and buying price will be rs. 9.5 so profit comes to rs. 0.5 which comes to 5.27 percentage (0.5 profit divided by 9.5 rs buying price).
This way one can average the holding price and get the maximum benefit. The same thing is explained in my previous blog that why periodical investment in mutual fund is important in that also we had explained the same concept.
But coming back to point we can utilise the market fluctuations in both the way. One can advise you to book profit which you gain on your holding due to budget announcements and again re enter in the market at the time of down fall. This strategy is good but what if market goes up only than we will endup selling on the price which is less than current market price. Yes if you think that the Fund which you have purchased is not going to give return in long term and want to make exit out of that then we can do so but make sure you are again investing in the fund to accomplish the future financial targets.
With this we end up this topic and wish you all to take the maximum benefit of Market fluctuations.
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