Fixed investment | Insist on fixed investment and expect the market to “smile” (including activities)

Market conditions are uncertain; should I increase my position or redeem it; it's really difficult to invest. Instead of hesitating and not knowing how to operate, choose the right place to play according to your own circumstances. Historically, fixed investment strategies may have performed better in volatile or bear markets.

When the market falls first and then rises, the fixed investment strategy dilutes costs and accumulates share; when the market fluctuates sideways for a long time, the fixed investment strategy continues to accumulate position shares at a relatively close cost, and there is an opportunity to obtain returns when the market rises later.

Fixed investment 3 questions 3 answers

1

What should I do if I lose my fixed investment? Do you want to keep throwing?

In reality, there must be some investors who are pessimistic and think that after a year of hard work, why did they lose money in the end? I had to stop losing my losses quickly, and I don't believe in fixed bets anymore. Fixed investment is not a steady profit and no loss; it is important to rationally view the losses generated in fixed investment.

Fixed investment losses can be analyzed in two situations: if the fund theme or industry we choose has fundamentally changed, then we can stop fixed investment and move to an industry or index with more potential and development prospects; if the fund we choose doesn't have much problem, just because it has experienced a bear market or a volatile market, then we can consider continuing to stick with it, because when the market is undervalued, it's a good time to accumulate chips. If we don't pick it up at this time, let alone wait for when?

2

What kind of variety is more suitable for fixed investment?

Choosing the “top three” products with high volatility, high growth, and high prosperity for fixed investment is probably the correct solution.

Here's a small example to help you understand:

Assuming we start on May 25, 2015 and insist on investing 100 yuan in the Shanghai and Shenzhen 300 Index (000300) every Thursday. Until May 25, 2022, let's compare it with a one-time purchase. You can see:

(Figure 1: Data source: iFind, 2015/05/25—2022/05/25, fixed investment yield = (index closing price - fixed investment cost) /fixed investment cost (fixed investment cost = harmonized average of index closing price), Shanghai and Shenzhen 300 Index (000300) 2015/05/25

As we can see from Figure 1, the fixed investment in the Shanghai and Shenzhen 300 Index obtained a positive yield, which is far higher than the return brought about by a one-time investment. This is because the Shanghai and Shenzhen 300 Index itself is not only volatile, but the trend is still upward in the long run.

(Figure 2: Data Source: iFind, 2015/05/25—2022/05/25)
As above, let's take a look at the trend of the China Bond Composite Index (under 1 year) (CBA00211) within the same range:

(Figure 3: Data Source: iFind, 2015/05/25—2022/05/25)
As can be seen, the China Bond Composite Index (less than 1 year) (CBA00211) fluctuates relatively little, and is basically a relatively stable slash, so products with low volatility such as short-term bonds may be more suitable for one-time investment, while partial equity funds with high volatility, whether actively managed or passive index, are relatively more ideal for fixed bids.

3

Do fixed investments require take-profit?

The classic smile curve of a fixed investment tells us that taking profit is more important. The market is cyclical. When the market rises to a high level, taking profit at the right time is a smarter choice.

Let's take the Shanghai and Shenzhen 300 Index (000300) as an example, so we can intuitively look at the gap between taking profit at a high point and holding it so far.

(Figure 4: Data source: iFind, 2015/05/25-2021/01/31, fixed investment yield = (index closing price - fixed investment cost) /fixed investment cost (fixed investment cost = harmonized average of index closing price), Shanghai and Shenzhen 300 Index (000300) 2015/05/25 closing point 5099.49, 2021/01/31 closing point 5351.96)

Also, starting May 25, 2015, we insisted on a fixed investment of 100 yuan every Thursday and chose to take profit when the market was high on January 31, 2021. Our yield is 45.05%, which is far higher than the 4.95% yield we have held until now.

Therefore, when it comes to fixed investment, the best policy is to stop profits at the right time. There must also be people who are puzzled. Standing in the present, we can look back at the past and easily know when it was a low point and when it was a high point. But we have no way of predicting the future, so what should we do at this time? One way to set a bet that is more suitable for ordinary people is to aim to win. We set the target yield in advance at the beginning and automatically redeem when we reach the target, so if we have the fruits of victory, we won't miss it!