Lord Keynes, the first economist, taught how to make a profit on a BO account without buying shares. Many times in the stock market, the sluggish money gives more profit than the money spent. Wondering what it is like? Yes, this is one of the most telling truths for the stock market.
It is only natural to buy shares at lower prices and sell at higher prices and then buy at lower prices. But if that low price is reduced even in a short time, it is better to keep the money idle by not buying shares at that low price.
Cash Money is the most risk-free position for your portfolio. Keeping money idle as a BO will not make any profit, but it will not be a loss. Generally, when a skilled investor understands that the risk is increasing in the market, he sells the risky shares and cashes the money.
If you think the market will be bad day by day, it is best to be prepared with no money to buy a share. On the other hand, the share price on your watchlist has dropped, but if there is a possibility of further decline, it is better not to buy. In this case, the potential share will have to be bought, given that the stock price is at the lowest price.
How much money should be kept in BO account?
It is not possible to answer this question correctly. There are some investors who do not hold any cash, while there are many investors who always hold more than 5% cash. No matter how good the market is, less than 5% cash should be kept at all times.
The percentage of money you put in cash in the BO account will depend on some of the following factors:
- What is the goal of your portfolio?
- What is your financial situation
- How much money can you bring to the market for new investments every month?
- How many days do you want to invest?
- How was your previous experience?
- What is the probability that the market can do well in the days ahead.
Read more – Misunderstandings about the stock market
Why put some cash in the BO account lazy?
As the price fluctuates, you can reduce the share price by averaging if the potential shareholder in your hand drops higher prices.
Many times there are many good opportunities in the market. Maybe if you have a good news and cash for another share than the stock you have, you can buy that stock.
When the market is at correction, you can buy your preferred stock at a lower price. However, all the money can never be eliminated at once.