INVESTMENT TIPS

Invest wisely is one phrase which is so commonly
used, its meaning is either mistaken or forgotten.
So, what does it mean to invest wisely? To
invest in the stock market without making any
hasty decisions. To have your basics right, and
avoid major losses and be able to gain maximum
returns on your investment.
However, the more important question here is,
How to invest wisely?
More than the what, it is the how that matters
more. Because, whether its a gain or a loss; it is
your money on the line. Here's a detailed look at
a simple and easy to implement method.
Say hello to Rupee Cost Averaging - A
wonderful technique to safeguard your
investment portfolio. It is a simple method which
if used well, will help increase your ROI,
irrespective of the type of investment you make.
Let us take an example to understand better, you
have found that a blue-chip company has some
put forth its shares at Rs.50 each, so you have
bought say 500 shares. A week later, the prices
are down to Rs40 per share and you are looking
at a loss of Rs 5000. You are left wondering if
you could have bought the shares at Rs 40 itself
right? Now, what if it reduces further?
This is where Rupee Cost Averaging will help
you. Instead of paying the entire 25000 in one
go, what if you had invested with Rs 5000 every
week? In the first week you would have bought
100 shares at Rs 50 each, in the second week
you would have bought the same at Rs 40 each
and in week 3,4 and 5 the share price would be
Rs 35, Rs45 and Rs 55 respectively. So, instead
of buying 500 shares you would have bought
570 shares for the same amount. This will
definitely help you balance out the profit and
loss, and gradually increase your profits.
Some of the key points of Rupee Cost Averaging
are as follows:
Don't invest using a lump sum amount every time
the market rises.
Invest uniformly irrespective of whether the
market is rising or not.
Invest a constant amount of your money, and
not in a constant number of shares. This will help
you buy more shares when you invest at the
right time.
This method works well for buying as well as
selling, since you are putting in a fixed value of
your money.
Even when things are against market trends; you
would still be able to increase your gains.
Similarly, when you're playing the market trends,
your risk is reduced.
This method helps you stay disciplined in
investing and effectively converts a regular
savings idea into a regular investing approach.
Apart from stability in investment, the good thing
about Rupee Cost Averaging is that you are
relieved from the unnecessary pressure of
forecasting market highs and lows.
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