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
YOU OWN DIFFERENT ASSET CLASSES FROM THE TRADITIONAL CASH, DEBT, EQUITY, GOLD, REALTY TO THE MODERN PRODUCTS LIKE MUTUAL FUNDS, ETFs AND DERIVATIVES AND STRUCTURED PRODUCTS. INSURANCE YOU OWN FOR PROTECTION. AN ATTEMPT IS MADE TO PIECE TOGETHER EVERYTHING AT A PLACE. "Mutual Fund investments are subject to market risks, read all scheme related documents carefully." Author : M V Monica MFD Code: ARN-99500
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