A Better Way Than SIPs for Investing in Indian Equity

Introduction

• Main Thesis: Systematic Investment Plans (SIPs) are not the best way to invest in equity for better returns.
• Better Alternative: A strategy that requires minimal time and can provide superior returns.

Prerequisites

1. Belief in Indian Equity: Must believe in India's growth over the next decade.
2. Avoid Picking Individual Stocks: Instead, invest in Indian index funds (e.g., Nifty 50 or Sensex).

Step-by-Step Strategy

1. Invest in Index Funds: Invest in top 50 companies rather than individual stocks.
2. Buy on Dips: Invest when the market is fearful and dips significantly.

Using RSI (Relative Strength Index)

• Monthly Chart: Use a monthly chart for long-term investment analysis.
• RSI Indicator: Use a two-period RSI and buy when RSI goes below 10.
• End of Month Analysis: Check if RSI closed below 10 at the end of the month. If yes, buy the index fund.

Example Analysis

• Historical Data: RSI below 10 in February 2020, March 2020 (Corona Crash), and June 2022.
• Strategy: Invest large chunks when RSI is below 10 and consider smaller SIPs in between.

Advantages of This Strategy

• Better Entry Points: Buy during market downturns for better price points.
• Avoid Averaging on the Way Up: Focus on accumulating during significant downturns.
• Returns: Index funds typically provide around 12-13% CAGR.

Cautions

• Patience Required: Markets may take time to recover post-purchase.
• Long-term Perspective: Must believe in long-term market growth despite short-term dips.

Conclusion

• This is a clever way to accumulate equity by buying on fear and downturns rather than a fixed SIP.
• Aimed at long-term investors who believe in India's growth prospects.

Call to Action

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• Educational Resource: Remember, this is educational content and not financial advice.