Because the stock market fluctuates greatly, the income of fixed investment funds is constantly changing. If there is more profit, all the income we have accumulated may be spit back, and it may take a long time to return to the original income. Making a good profit will make your investment income run faster than others.
If you don't stop loss, it's easy to understand, that is, you should stick to it for a long time and ignore the short-term fluctuations of the market.
However, on the issue of profit taking, most investors have made a mistake. Should the fund stop profit? When should I make a profit? How to calculate the profit-taking rate? Wait a minute.
Indeed, in order to truly realize the correct take profit, we must first solve these problems.
The fixed investment of index funds should not only adhere to the fixed investment, but also take profits at an appropriate time. As the saying goes, the apprentice will buy and the master will sell. It can be seen that the take profit operation is indeed difficult.
There are many ways to make profits from the fixed investment of index funds in the market, which need not be considered very complicated. If we stick to it in a simple way, we will have good results. As for the more complicated way, you can wait for the professional knowledge to be richer and then learn step by step.
There is one of the most common methods for index funds to make profits by fixed investment, which is called the target rate of return method, that is, when the index funds with fixed investment reach their own set rate of return, they can sell and make profits.
The most important part of this method is to determine the profit-taking target.
If the goal is set too high, it may not be achieved for a long time; However, if the target is set too low, such as 5%, 10%, and sometimes it is too easy to achieve, you may miss the later market rise.
Reference rate of return of profit target
The profit target can be expressed by total rate of return, annualized rate of return or uniform rate of return. The reference basis is different, and the goal setting is also different. It is entirely a personal matter to choose which rate of return to target.
If you value the actual income, you can set the total rate of return target, but this should consider the cumulative time of fixed investment;
If you want to measure the annual income, then choose the annualized rate of return;
If long-term investment values compound interest accumulation, then choose compound annualized rate of return.
Setting of output target
No matter which rate of return is chosen as the target, the specific value of the income target should be set. If the goal is set too high, it may not be achieved for a long time; But if the goal is set too low and sometimes too easy to achieve, you may miss the later market rise.
If a reference value is to be given, the total rate of return should be at least 20-30%, and the compound annualized rate of return should be above 10%.
Fixed investment cycle
Take profit time should not be too short. To a certain extent, it also determines that the profit-taking target cannot be set too low. If the fixed investment reaches the target rate of return you set in just a few months, profit-taking is not particularly ideal at this time. Because the time is too short, the number of fixed investment periods is too small, the accumulated investment is not large, and the absolute income is not much. Moreover, short profit-taking time will lead to frequent profit-taking and high transaction cost, and the redemption fee of the fund is closely related to the holding time. The longer the holding time, the less the redemption fee. Even if it is held for more than 2~3 years, most foundations are free of redemption fees.
Generally speaking, it takes at least 30 fixed investment cycles to take profit.
Of course, there is no absolute principle of fixed investment and profit taking. It is a very personalized thing, and the right one is the best.