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Nifty-based investment strategy

The strategy of buying low and selling high looks great on paper, but it is very difficult to practice in the market

I sold my mutual fund investments when Nifty was at 8,500 level. Now, I m buying from 7880 to 6612 levels. I have deployed 80 per cent of the money. I want to keep 20 per cent of the money for rainy day. Is it a good strategy?
- B Aglave

You shouldn't base your investment decisions on the market levels. This is because though the strategy of buying low and selling high looks great on paper, it is very difficult to practice in the market. You should start goal-based investing. Invest in safer avenues like bank deposits, debt mutual funds, etc for your short-term goals that are five years and below. Invest in equity mutual funds to achieve your long-term goals like retirement, children's higher education, etc. Also, create a contingency fund that will take care of your living expense for six months and buy a health insurance cover and life insurance cover (if you have financial dependents).

For more information to on how to invest, read: First things...

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