2. Rupee cost averaging
 The simplest and most effective formula is rupee cost
averaging. First stocks with good fundamentals and
long term growth prospects should be selected. Such
stocks price tend to be volatile in the market and
provide maximum benefit from rupee cost averaging.
Secondly investor should make a regular commitment
of buying shares at regular intervals. Once he makes
commitment, he should purchase the shares
regardless of the stock’s price, the company’s short
term performance and the economic factors affecting
the stock market.

3. Quarter Market
price
Shares
Purchased
Cumulative
investment
Market
value
Unrealised
profit or
Loss
Average
Cost per
share
Average
market
price per
share
1. 100 10 1000 1000 0 100 100
2. 90 11 1990 1890 -100 94.76 95
3. 100 10 2990 3100 110 96.45 96.67
4. 110 9 3980 4400 420 99.50 100

4. Constant rupee plan
 This plan forces the investor to sell when the price
rises and purchase as the price falls.

5. Period Market
price
No. of
shares
Value of
stock
portfolio
Value of
defensive
portfolio
Total
1 50 200 10000 10000 20000
2 44 200 8800 10000 18800
3 40 200 8000 10000 18000
4 40 250 10000 8000 18000
5 44 250 11000 8000 19000
6 50 250 12500 8000 20500
7 50 200 10000 10500 20500

6. Constant ratio plan
 Constant ratio plan attempts to maintain a constant
ratio between the aggressive and conservative
portfolios. The ratio is fixed by the investor.

7. Market
price
No. of shares in
stock portfolio
Value of
stock
Value of
defensive
portfolio
Total
portfolio
value
Ratio of stock
portion to
defensive
portion
50 100 5000 5000 10000 1.00
48 100 4800 5000 9800 .96
45 100 4500 5000 9500 .90
45 105.5 4748 4752 9500 1.00
40.5 105.5 4273 4752 9025 .90
40.5 111.4 4512 4511 9023 1.00
44.5 111.4 4957 4511 9468 1.10
44.5 106.4 4734 4734 9468 1.00

8. Variable ratio plan
 According to this plan at varying levels of market
price, the proportion of the stocks and bond change.
Whenever the price of stock increases we decrease the
proportion of stocks and vice versa

9. Share price Value of
stock
proportion
Value of
defensive
Total
portfolio
value
Stock as a
percentage
of portfolio
Portfolio
adjustment
Shares in
stock
proportion
100 10000 10000 20000 50.00 100
90 9000 10000 19000 47.37 100
80 8000 10000 18000 44.4 100
80 12640 5400 18040 70.06 Bought 58
shares
158
90 14220 5400 19620 72.48 158
100 15800 5400 21200 74.53 Sold 52
shares
158
100 10600 10600 21200 50.00 106