Business

If the stock market is at the highest level, higher return on investment is possible

Experts usually recommend booking profits when the stock market is at record highs. However, this strategy is not 100% correct. Because investments made for three and five years showed that the day the market was at a new peak, the return on investment was higher. At the same time, investments made on ordinary days have yielded low returns.

How to invest at record heights

Typically, investors make a profit by buying the stock down and selling it in a bounce. Investing in stocks at record heights is considered a misguided strategy but it is not entirely accurate. Because when there is a bull run in the market, it would not be right to wait for the stock to come down. In such situations, investors who only continue to invest with the market at high prices get great returns because the market grows faster. When a two- or three-year-old bull runs in the market, the average price of the stock bought at a higher price decreases.

Period Return to investment on a normal day

Record high day return on investment

One year 11.7 percent

14.6 percent

Three years 39.1 percent

50.4 percent

Five years 71.4 percent

78.9 percent

Read more:Failure in share trading, SBI has imposed crores of rupees on Mukesh Ambani’s RIL

Fat comes back even after a big fall

The Indian stock market crashed with the world in March due to the corona crisis. Investors who first realized the crisis withdrew their money from the market in February, but those who did not realize it were caught. Investors who invested in Nifty index funds in February, who were unable to raise their money, also received a 1 17 percent return by the end of this year. However, this has been possible due to the rapid recovery in the market. This trend encourages investment in heights.

High returns on high day investments

According to JPMorgan, the average investor who invested in the S&P 500 in 1987 returned 11.7 percent a year. At the same time, those who have invested at record highs have a 14.6 percent return on an annual basis.

What investors should take care of

Before investing in the stock market, investors should know how long they have been investing and how far the market can go. If someone has been investing for a decade, it doesn’t matter how high the market is. In this situation it is also possible that investors wait for the market to fall and it does not happen. The firm manager of an organization is a master of it. He knows when to invest in the market and when to go out.

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