We all have some goals in life. Everyone wants to grow. We all want to achieve more and more things in life. We all want to make our future life better than the past and present life. Those who are having a bike now, they want car in future. Those who are having a car now, they want a luxury car in future. Those who are living on a rent house they want to have their own house in future. We all have goals like children education, their their marriage. We also could face medical emergencies for which we require good amount of money. We all want to become crorepati.
Can we achieve all our goals and future targets just on our salary or income from any business ? The answer is no, seeing the current rate of inflation. We have to grow our money more than the rate of inflation to achieve the financial goals of life. We don’t just have to grow it we have to grow it at faster rate to beat the inflation.
Most of us prefer safe investment options like fixed deposits, debentures , gold , real estate etc. Gold has been a good investment options for decades but not now it has given negative returns in the last couple of years. Saving account only give you 4% in a year and considering 8% of average inflation, it is actually giving you a negative return of 4% percent. Putting your saving in just bank’s saving account is actually de-growing the money. A fixed deposit(FD) can give you 10% average return but discounting the inflation you are only getting 2% return on your investment. The same is with debentures and bonds. Investment in real estate has given good returns but real estate investment is out of reach for many middle and lower class people and is affordable mostly to higher class people.
Do we have anything which can give us better returns beating the inflation, the returns which can help us achieve our goal ? The answer is stock market. Investing is stocks can definetly give us such kind of returns.
Nifty and Sensex has given 18% CAGR (Compounded Annual Growth Rate) return in the last 30 years. Besides that on average stocks have paid 1.5% dividend annually. The study also says that for a 4 year time frame the investment gave positive returns for 87.36% times since 1979. If the period is divided into 5 year slot, the investment has given positive returns 90% of the time. The problem why many investors still fail to make money is because they invest for long term in fundamentally weak stocks and many times they exit seeing some downfall. Like we don’t go and check our fixed deposit value everyday , we don’t check our property value everyday, the same way we should treat our investment. If you cant do research and find out fundamentally good stocks, they why not invest in the the index, the nifty and sensex. This also can give you superb money.
People are scared to invest in shares because they feel that it is very risky. Its somewhat true. Its not just stock market whole world is a risky place. There is always a risk in anything we do. But then, with the right education and research, we can minimize that risk. If you chose the right stocks and have a longer term horizon then believe me its not at all risky. Many people are afraid of Equity because it can give negative returns, which is 100% true and possible. Anything can give negative return investment is bullion has given negative return, even property investment can give negative return in certain situation. But people do not understand that its not a short term wealth building asset class. Its some thing for long term. When you invest in Equity for Long term, you are bound to get excellent returns