How to use Margin of Safety in your Mutual Funds Investments

Margin of Safety Warren Buffett

“The three most important words in investing are margin of safety” – Warren Buffett


Right Timing and Fixed Timing

Generally, we have a tendency to ignore the timing of our investments especially when it comes to investing in mutual funds.
However, it cannot be denied that timing is an essential ingredient for better returns.
The simple reason behind it is that lower entry prices produce better than average returns.

The problem with this approach is how to determine the “right timing” and so the “right pricing”.
It is very difficult for an average investor to discern, which is why, we generally tend to go for “fixed timing” SIP.

To help the investor overcome this limitation, we have RankMF’s MosDex: Margin Of Safety Index.

Read more to understand the Margin of Safety concept


Margin of Safety Index – MosDex Score

What is ‘MosDex’ and how does it help you?

The Margin Of Safety Index helps to determine whether it is the right time to invest in a particular fund or not.
SmartSIP automatically applies the buy low, sell high principle to your investments using MosDex score.

Here’s how the MosDex score helps in generating better than average returns:

  • When the ‘MosDex’ is between 90-105, the algorithm continues your SIP as usual in your equity fund. This is because the price is reasonable.
  • When the ‘MosDex’ goes beyond 105, the algorithm automatically doubles your SIP in your equity fund. This is because price is cheaper.
  • When the ‘MosDex’ is between 80-90, the price is expensive. Hence SmartSIP automatically skips investing in the equity fund. It parks the SIP installment in a low-risk liquid fund.
  • When the ‘MosDex’ falls below 80, partial profits are booked automatically as price is very expensive. The algorithm invests further SIP installments in a low risk-liquid fund.
  • This will continue till such time when the price comes back to a reasonable or inexpensive level. Then the investments are shifted back to the equity fund.

All of this happens automatically through the preset algorithms with the help of the MosDex score levels and without any human intervention.

SmartSIP, based on the MosDex signal, invests your money to generate better returns, taking into account the best of “discretionary” and “fixed” investment styles.


Use the power of MosDex and invest through SmartSIP today.

How to use Margin of Safety in your Mutual Funds Investments
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