Long Term Investing in Index ETFs. Simple method.

suri112000

Well-Known Member
#1
I have conducted numerous backtests on individual equities from 2006 to 2017 covering many up and downs of stock market. To my surprise, many of the blue chip shares while they were before a dip in the market went vanished from market now. The risk in investing regularly in stocks shows that we may completely loose our capital if we keep on investing like a sip in them. The stocks which vanished such varied from anywhere from 60 to 80%. Long term regular investing technique will not work for individual equities.

ETFs on the other hand cannot vanish from market unless the exchanges are vanished. Further, the stock exchanges churn their index portfolio now and then so that index contains only such stocks which ensure taking the index high. ETFs replicate this process without our intervention. So, in the long run, we are bound to win whatever may happen in the market in short periods. Another point of consideration, our strategy should invest more when market is low and invest less when market is high. Point is how low is low and how high is high. Low and high cannot be defined in absolute terms. So, we need a clear indicator like thing to tell us market is high or low. The indicator should be simple as well. The indicator is not technical indicator but a simple calculation based.

I have prepared an excel sheet incorporating the workings which i will upload in google drive. I will explain the method of investing.

Select any date of the month between 1 and 28 to invest so that we can invest regularly on the particular date.

We are going to calculate the average price of ETF. If present price as on the date of investment is higher than average price, we invest Rs.1000 or otherwise we invest Rs.2000. If you need to invest more do it on weekly basis.
 
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pannet1

Well-Known Member
#3
I have conducted numerous backtests on individual equities from 2006 to 2017 covering many up and downs of stock market. To my surprise, many of the blue chip shares while they were before a dip in the market went vanished from market now. The risk in investing regularly in stocks shows that we may completely loose our capital if we keep on investing like a sip in them. The stocks which vanished such varied from anywhere from 60 to 80%. Long term regular investing technique will not work for individual equities.

ETFs on the other hand cannot vanish from market unless the exchanges are vanished. Further, the stock exchanges churn their index portfolio now and then so that index contains only such stocks which ensure taking the index high. ETFs replicate this process without our intervention. So, in the long run, we are bound to win whatever may happen in the market in short periods. Another point of consideration, our strategy should invest more when market is low and invest less when market is high. Point is how low is low and how high is high. Low and high cannot be defined in absolute terms. So, we need a clear indicator like thing to tell us market is high or low. The indicator should be simple as well. The indicator is not technical indicator but a simple calculation based.

I have prepared an excel sheet incorporating the workings which i will upload in google drive. I will explain the method of investing.

Select any date of the month between 1 and 28 to invest so that we can invest regularly on the particular date.

We are going to calculate the average price of ETF. If present price as on the date of investment is higher than average price, we invest Rs.1000 or otherwise we invest Rs.2000. If you need to invest more do it on weekly basis.
wonderful idea and i had very similar one. i was looking at bank nifty index and the infamous bankbees that follows it. the variation with mine is that instead of making a systematic investment, i was thinking in terms of a trader. whenever a week closes down, we buy. we have lets say an investment of 4-6 times that of the current bank nifty price.

so lets say bank nifty is down continuously for 4 weeks, then we continue to buy. we take profit if one part of it comes into profit (i.e we have bullish week), provided it is profitable and meets the brokerage.
 

kajalnigam

Active Member
#6
Invest regularly in low-cost index ETFs that track broad market indices like the S&P 500 for long-term wealth growth and diversification, am I right??