To Churn or Not To

When get stuck with a falling Portfolio Value, either in Mutual Fund or direct equity, one has a tendency to churn the portfolio. Sell off and start again.

How should one approach the portfolio in such cases?

Here I am giving Case A where Buy&Hold is followed; Then Case B where Churning is followed over the same period of 5 years with an annual 15% growth.

Obviously the churn has eaten up Rs 7846.29 in the process.

Now I relax my assumptions.

Market fluctuates and rates go further down. What will happen? every time the churn will certainly take 1% exit load irrespective of market conditions.

So churn is beneficial only when the market growth rate is more than 1% and adequate to cover the bank expenses and attendant disturbances.

Happy investing