DSIJ Mindshare

EQUITY: THE BEST WEALTH CREATOR FOR INVESTORS

Whereas in the same period a more popular form of investment in financial asset i.e. bank fixed deposits would have yielded anywhere around 8-11 per cent, depending upon the tenure and age. Investment in gold would have yielded return of 15 per cent, which comes closest to equity returns. Compare this to the average inflation of more than 8 per cent in the same period. Equity as an investment vehicle will gain more prominence now as the economy is expected to pick up after recording sub 5 per cent growth rate in FY13 and FY14. Asia’s third-largest economy posted GDP growth of 4.7 per cent in FY14 and 4.5 per cent growth a year earlier. Nonetheless, things are definitely looking better for the economy after the new government has assumed power as well as a fall in commodity prices.

Several new policy measures taken by the government such as ‘Make in India’, ‘Pradhan Mantri Jan Dhan Yojana’, opening up of various sectors for FDIs, development of smart cities, improving the ranking on ease of doing business, etc. will go a long way in increasing India’s GDP growth rate in a more sustained way. Moreover, a fall in the commodity prices - especially crude oil - is definitely the proverbial icing on the cake. This fall will help us to manage our current account deficit in a more efficient manner.

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My long experience in the equity market has certainly taught me a lesson that those who invest in equity with long-term investment horizon are rewarded the best. The reward does not come only from capital appreciation but also from dividend payments. One of the best examples is of Hero Motocorp (formerly Hero Honda). If you had invested Rs 1 lakh at the beginning of 1996 the same money would have grown to around Rs 94 lakh today i.e. March 17, 2015 aft er adjusting for bonus and splits. This means your investment would have grown at a CAGR of 25.5 per cent. The story does not stop here; the dividend earned from your investment would have made you richer by Rs 5.3 lakhs in the same period.

This is the power of long-term equity investment. It’s no wonder then that I believe that the true potential returns of investment in equity are realised over a longer term. We at DSIJ, over the past 29 years of existence, have provided our readers with the best of investment options so that they can generate wealth meaningfully. The table below highlights some of our past recommendations and how the returns have been over the years.

Further, this is the third year in a row that we are coming out with the list of ‘DSIJ 150’ in our anniversary issue, which captures those companies that are India’s best value and wealth creators. Though this is not our recommendation list, one can always start with these companies as a filtered list and probe further before committing any investment. Our cover story lists all the companies with their financial snapshots. Beside this you will also find the interviews of the management of some these companies explaining how they have managed to out-perform their peers on the basis of various parameters and how they have created value for their stakeholders. My suggestion to our valued readers is that this is one of the most opportune times for investors to start allocating more of their savings to equity. With the Indian economy at the cusp of change, equity investors will remain the beneficiaries of such a change.

DSIJ MINDSHARE

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Mindshare29-Mar, 2024

Multibaggers28-Mar, 2024

Interviews28-Mar, 2024

Multibaggers28-Mar, 2024

DALAL STREET INVESTMENT JOURNAL - DEMOCRATIZING WEALTH CREATION

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