Brief Summary
This video discusses an alternative SIP (Systematic Investment Plan) strategy in the stock market, focusing on ETFs (Exchange Traded Funds) rather than mutual funds. It compares a normal SIP approach with a modified SIP strategy called "Drop Trades," which involves investing more when the market dips and using debt instruments like Gilt Beas to park funds when the market is not favorable. The video highlights the potential for higher returns using the "Drop Trades" strategy, emphasizing the importance of patience and a long-term perspective in investing.
- Compares normal SIP with modified SIP "Drop Trades" strategy.
- Focuses on ETF investments rather than mutual funds.
- Highlights potential for higher returns with strategic investments during market dips.
- Emphasizes patience and long-term perspective.
Introduction to SIP and Investment Strategy
The video introduces the concept of SIP in the stock market, particularly focusing on how investments grow over time. It presents data from 2015 to 2025, illustrating the potential returns from investing ₹1 lakh monthly. The presenter contrasts a normal SIP approach with a modified strategy called "Drop Trades," claiming the latter can yield higher returns with less initial investment.
Normal SIP Strategy and Returns
The presenter explains a simple SIP strategy involving a monthly investment of ₹1 lakh in Nifty ETFs. Over 10 years, a total investment of ₹1 crore 26 lakhs would result in 98,604 units of Nifty 20 ETF, growing the portfolio to ₹2 crore 74 lakh, with an unrealized profit of ₹148 lakh. This represents a 117% increase in the portfolio value, with a CAGR (Compound Annual Growth Rate) of 7.71%. The presenter clarifies the difference between CAGR and XIRR (Extended Internal Rate of Return), noting that SIP returns are more accurately measured by XIRR, which in this case is 16%.
Modified SIP Strategy: Drop Trades
The presenter introduces the "Drop Trades" strategy, which involves varying investment amounts based on market movements. Unlike the normal SIP, this strategy does not invest a fixed ₹1 lakh at once but rather invests smaller amounts at different times, such as ₹19,000, ₹4,000, or ₹1,000, depending on market dips. Over the same period, this strategy results in an invested amount of ₹1 crore 29 lakh, yielding a portfolio of ₹3 crore 46 lakh, with an unrealized profit of ₹2 crore 16 lakhs. This represents a 166% return and an XIRR of 20%.
Understanding the "Drop Trades" Strategy
The presenter explains the core principle of the "Drop Trades" strategy: investing when the market falls. Instead of investing the entire ₹1 lakh in the equity market, the strategy involves investing in debt instruments like Gilt Beas, which offer returns around 6%. The rule is to invest ₹8,000 in Nifty 20 when the market falls by 1%, ₹4,000 when it falls by 0.5%, and ₹16,000 when it falls by 2%, with a maximum of five investments per month. Any remaining funds are invested in 6% return instruments.
Implementing Super Trend Indicators
To refine the "Drop Trades" strategy, the presenter introduces the Super Trend indicator on weekly and monthly Nifty charts. When the market follows a green trend, investments are kept low. If Nifty falls more than 8% from its all-time high and breaks the weekly Super Trend, the investment is multiplied by 2.5 times. If the market falls 20% and breaks the monthly trend, the investment is multiplied by 10 times, using funds from gilt investments to buy equity.
Warren Buffett's Principles and Long-Term Investing
The presenter references Warren Buffett's principles, emphasizing the importance of avoiding leverage and staying patient. He highlights that the stock market is an instrument to transfer money from impatient to patient people. The "Drop Trades" strategy aligns with this philosophy by advocating slow, strategic investments and avoiding the rush to get rich quickly.
Additional Rules and Backtesting
The presenter provides additional rules for different types of investors. For those with regular jobs, he suggests dividing the monthly investment amount by 20 (the number of trading days) and investing daily when the market falls. If the market rises for several consecutive days, the saved amount should be invested when the market next dips. He also offers backtesting for this system in future videos based on comment requests.
Conclusion: Flexibility and Future Content
The presenter concludes by emphasizing the flexibility of the "Drop Trades" strategy, noting that even normal SIP investments will yield returns. He encourages viewers to set alarms to check the market briefly each day to make informed investment decisions. He also mentions upcoming videos on crypto trading, including revealing PNL (Profit and Loss) and strategies for reducing fees, and promotes free webinars on Triple Compounding System and crypto trading.
