14% returns may sound unattractive and inadequate to most individuals. But the truth is, it could do wonders for you! Let’s explore how.
In 1971, the Govt’s Enemy Property Office had shares worth Rs. 29 Crores, belonging to people who left India during the Indo Pak war of 1965. In the year 2015 i.e. 44 years later, the shares were valued at 10,000 Crores.
That is approximately 345 times in 45 years!
Can you imagine what return per year it must have taken to grow by 345 times in 45 years?
Well, the answer is approximately 14% p.a.
Yes, that’s all.
It took only 14% p.a. to grow those Rs.29 crores into Rs. 10,000 crores over 44 years. And this 14% p.a. return does not include the Dividends that would have been paid out on these shares. This was a static investment on which nothing was done.
You might notice two key elements here – the rate of return and the time horizon involved.
Holding equity investments for 20 or 30 years can create wealth. Buying and selling every 1- 2 years will create lots of paper work and not wealth!! The real power of equity investments lies in holding them for long periods of time. After all, even Rome wasn’t built in a day!
Source for the news on Enemy Property:
An Engineer & MBA with exceptional analytical skills, a deep understanding of the Financial markets & Investment products with 31 years of experience.