How to Time Your SIPs Using PE Ratio in Nifty 50?
HOW TO GENERATE AT LEAST 12% PA FROM A 5-YEAR SIP WITH 95%+ PROBABILITY? PART 2
HOW TO TIME YOUR SIPs SUCH THAT YOU CAN GET UPTO 39% PER ANNUM DURING MARKET RALLIES, AND BANK-FD LIKE RETURNS EVEN IN THE MIDDLE OF A MARKET CRASH
In Part 1 of this series, we examined some of the fatal flaws of a conventional SIP-based investment approach. We saw how even after investing in the NIFTY through an SIP spanning, not 1, not 2, not 3, but as long as 5 years, the outcome of such an SIP almost entirely depends on just one factor - Market conditions at the time of the SIP coming to an end! If your 5-Year SIP in the NIFTY is coming to an end in the middle of a strong rally (e.g. 5-Year SIP from Nov-02 to Nov-07, which ended close to the market top witnessed before the crash of 2008), you can get returns of up to 45% per annum at the end of your SIP. However if you are unlucky to have your 5-Year SIP ending in the middle of a steep market crash (e.g. 5-Year SIP from Apr-15 to Apr-20, which ended in the middle of a 38% crash in NIFTY that was witnessed at the onset of the COVID pandemic), you can end up with deeply negative returns!
And this can have grave implications, especially if you have a financial goal that is due in let’s say, 5 years from now, and you are trying to achieve this financial goal through an SIP investment. And that is because going by the above-mentioned historical performance of a 5-year SIP in the NIFTY, you would almost certainly fall short of the amount you were targeting to achieve at the end of your SIP, if your SIP comes to an end in the middle of a steep market correction.
But fret NOT, because there is a way to address this! In Part 2 of this series, I explore a unique strategy to time the markets such that you can accrue returns as high as 39% per annum when equity markets are rallying strongly, and yet, achieve returns comparable to bank fixed deposits even in the middle of a market crash. So please do watch this video to understand this unique strategy that can help us achieve the best of both worlds – high returns when markets deliver, and phenomenally high downside protection even when market do NOT!
Data on NIFTY’s historical levels and NIFTY’s PE Ratio has been sourced from the website of National Stock Exchange (NSE)
Do watch the below YouTube video on” Turning Your SIP Into a 12% PA FD Even During a NIFTY-50 Crash | Part2-Market Timing Using PE Ratio”
