12,399 views

, 10 tweets, 4 min read

Is it a good idea to keep accumulating #NiftyBees on every market crash for a long time? Just happen to read this question on Quora, so went head & did a 18 years of historical data analysis. Here's what I found.

Let’s analyze two scenarios.
1. How much we would have made by now, if we had invested X amount in Nifty bees every month from year 2002.
2. How much we would have made by now, if we had invested X amount only on Months when Nifty gone down significantly.

From Year 2002 to 2019, Nifty bees moved from 100 levels to 1300 levels. Consider we have invested Rs.10,000 every month from year 2002 to till now. Then our total investment value would be Rs.21.5 lacs and our returns is Rs.79.2 Lacs, that’s around 268% over all.

This is how your investment would have grown over the years.

Now lets consider we shall invest only when markets have gone down. Here’s the scatter plot of Nifty, as per chart it is evident market usually drops 0 to 5% often, greater than 5% are usually rare occurrence, so will consider investing in it only market drops >-5%.

If markets did not go below -5%,we will not invest , we shall keep accumulating cash and wait for such correction to invest all.This is how your investments returns would have been, if you invested only when market tanks. Investment of Rs.21.1 lacs would have become Rs.75.5 lacs

As you can see, there were only 25 times markets corrected significantly in a month and years like 2014 & 2017, markets kept on moving higher without any corrections.

Though investing only during correction times has given you good returns, still it did not beat the regular monthly investments. When market enters the all time high territory, the volatility usually gets reduced drastically and you hardly see any fall in index.

So its wise to stick to regular fixed monthly investment in Niftybees, instead of timing the market.