Thinking of redeeming investments during market highs? This is how much you may lose

Since the autumn in March 2020, Indian markets have proven a stupendous progress over the past 18 months. From the low of 25,981 on 27 March 2020, Sensex has reached an all-time excessive of 60,000 final month. A straight 134% positive aspects in simply one-and-a-half-years. Riding excessive on this, mutual funds have additionally given excessive return in the identical time span. 

Investors who took the chance to speculate during the low has gained great returns for redeeming the identical when the markets have been excessive. However, it is to notice right here, if they’d have stored the funding intact,  the positive aspects would have been even increased. 

Let’s perceive this with a couple of instance. 

Quant Small Cap fund and Kotak Small Cap fund have been the largest gainers during this market rally. Now on 27 March 2020, when the Sensex was at 25,981, the NAV for Quant Small Cap and Kotak Small Cap fund have been 30.15, 50.07 respectively. 

Now on 9 October 2020, when Sensex reached 40,509, the NAV for Quant Small Cap was 62.05 , and the NAV for Kotak Small Cap fund was 88.23. So if an investor would have invested 1 lakh on every fund on 27 March 2020, the corpus would develop to turn out to be 2.05 lakh and 1.76 lakh. 

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Sensex at 40K

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Source: Value Research

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Source: Value Research

Similarly, on 5 February 2021, the Sensex reached 50,731, and the NAV of Quant Small Cap was 76.35, and for Kotak Small Cap fund, the NAV was 119.82. So the investments would develop to turn out to be 2.53 lakh and 2.39 lakh respectively. 

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Sensex at 50K

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Source: Value Research

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Source: Value Research

And, on 24 September, because the Sensex reached 60,048, the Quant Small Cap’s NAV was 132.26, and Kotak Small Cap fund’s NAV was 177.94. The corpus for each the investments would develop to turn out to be 4.38 lakh and 3.55. 

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Sensex @60K

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Source: Value Research

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Source: Value Research

Hence that manner, if the investor had redeemed the Quant  Small Cap funding on 9 October 2020 when the Sensex reached 40K as an alternative of 24 September 2021, he would have lost 2.33 lakh and equally, for his funding in Kotak Small Cap fund, he would have lost 1.79 lakh. 

So, as an alternative of making an attempt to time the markets, and redeem your investments during market highs, buyers ought to promote models when their is want for money or when the investor is nearing his monetary objective.

 

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