Archive for November, 2014

Invest in India

Inspired by the Make in India campaign of the Prime Minister.

India has one of the largest stock markets in the world, extremely well regulated and has given spectacular returns over long term which is tax free to boot. yet most Indians prefer real estate or gold. While in the past this may have had some validity ( As gold was like cash and can be borrowed / sold fast during emergency, Real Estate provides security etc) it is not the be all in today’s world. Your bank ATM ensures that you can get hard cash 24*7 and what is more pays you some interest (even  6% in some cases!!)  unlike gold which you pay to safeguard ( even if some one steals from ATM your money is safe whereas if your gold is stolen it as good as gone). Agreed that a home of ones own is every ones dream, and all should work towards it but it is sad to see many people buy real estate for investments and struggle to pay EMI’s for the next 20 years.

Sadly, while majority of us focused on past short term returns to buy Real Estate and Gold, we missed the long term story unfolding in Indian equity markets which has given around 16% returns over last 10 years and around 18% per annum returns over 20 years. To put that in perspective at 18% your investment doubles every four years. Mutual funds that have been around for 20 years have given around 22% or 53 times in 20 years !!

Indians shun equities because they think it is ________( fill your pick here : gambling / risky / volatile etc) this is again an old tale, Indian markets have delivered amazing returns to those who invested and were patient, I’m not for a minute suggest that one should invest only in equities but that one should at the the least ‘also’ invest in equities.

What is more, investing in equities can be done in small chunks monthly by almost anyone ( from 1000 Rs / month)  so that it is easy on your budget and can help you create wealth ( Rs 1000 invested every month in Franklin India Bluechip for last 20 years has grown to Rs 28 Lacs, no doubt it was not a smooth ride of 22% every year but lumpy as some years saw great returns and some negative)  but overall the performance was excellent. In fact if one had started at 1000 Rs and increased the investment as their incomes grew, the resulting wealth would be in crores !!

So, Invest in India. If you believe that this country can do well, its stock markets would do much better !!!

Note : Past returns may or may not be sustained in the future / Mutual Funds are subject to market risks. Come to think of it that is true for Gold and Real Estate,too !!










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