Invest with Gurantee to Sell at Highest Price

Invest With Gurantee to Sell at Highest Price:

(For Investors who want the Best Returns without the Risk of Losing Selling Opportunities at Higher Prices.)

The last stock rally that started in 2003 and ended up in Jan 2008 was more like a dream run. Anyone who had invested Rs.1,00,000 in 2003 would have made 300% to 400% by simply staying invested. But many do regret for having not sold at the peak price and feel having missed out a golden selling opportunities. Though the loss is realized only if booked at the current levels, many investors would have been contented if they were able to "freeze" the highest price with the provision to continue staying invested in Stocks/mutual funds.

SBI Life, a wholly owned subsidary of State Bank of India has come out with an innovative investment avenue where in investment need to be made for the three years in a row. After that, the client is free to redeem/close the investment at the prevailing market price. Meanwhile, if the investor miss out selling at higher price (just like the one that happened when market rallied from 4000 points in June 2003 to 21000 points in Jan 2008), the client needs to wait for 10 years when all the units will be redeemed at the highest NAV recorded in the first seven years of the scheme. Inbetween the client is free to sell in part/full of all his investments if it is favourable or desired by his.

At EASY Investment we back-tested this concept as per the the table annexed. (Do have a close look a the table).

The inference of the study are:

• The Investment was assumed to have stated in 1999. Hence the highest NAV in the first 7 years was Rs.26.62.
• But onthe 9th Year the markets did peak out (Jan 2008). The NAV then was Rs.59. The investor could have sold at this peak price. IF Greed was the problem, they he/she would have waited for much higher price.
• Meanwhile markets crashed. In the last 14 months, the NAV crashed down to about Rs.23 (as on 4th March 2009).
• Though the prevailing NAV is lower, the highest NAV in the first 7 years - Rs.26.62 is taken as the final NAV for redemption. Had the NAV on the 10th year been better than Rs.26.62, then that NAV would be accounted for redemption.

Ultimately investors stand to gain in this volatile uncertain market conditions. It is like investing in equity with a Safety net to sell at the highest NAV on maturity.

To know more about this concept, do email us at invest@easymadurai.com or call us at 9944193339.

BusinessLine has analysed this product in the below mentioned link: http://www.thehindubusinessline.com/iw/2009/03/15/stories/2009031550631400.htm