Rupakumar Pradhan, CFPCM, CWM®

Personal Financial Advisor

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38 Years SENSEX Return- 16% Per Year

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38 Years SENSEX Return- 16% Per Year

38 Years SENSEX Return- 16% Per Year
October 13
13:39 2017

Indian equity market delivered good return in last 38 years. As on 12th October 2017, Sensex closed at 32,182 points.

BSE completed 38 years since 1979-80 (base year). But what is the return per year? Does the SENSEX really give good return per year, in the long-term?

Why 1979-80? That is the year from which Sensex came into existence with base as 100.

I am trying to explain yearly return delivered by the Sensex (Equity) in last 38 years.

Assume you have invested Rs.1 lakh in Sensex 38 years ago. As of 31st March 2017, the value was Rs.2.81 crore.

If we will consider dividend yield in addition to capital appreciation for the Sensex, the future value would be more than Rs. 2.81 crore. Assuming a dividend yield of 1% on an average, the Sensex returns worked out to Rs. 3.89 crore.

For your understanding, put it in different.

If you have invested in Equity, your investment has multiplied wealth by 281 times.

Sensex has seen multi-fold returns over the past 38 years, as the 30-Stock Index managed to rally from 100 level back in 1979 to 29,633 in 31st March 2017. If you really want to beat inflation and create wealth, you should invest in equity or equity related schemes.

38 Years SENSEX Return – 16% Per Year. (See the below table)

Yes, Sensex has delivered 16.16% return per year since its inception.

In the last 38 years, Sensex has given a Compounded Annual Growth Rate (CAGR) of 16.16%. But journey has been a volatile one. In last 38 years

  • 26 years have given a positive return [Averaging (+) 40.97%]
  • 12 years have given a negative return [Averaging (-) 16.75%]

You can compare this Sensex return with other asset classes -Fixed Deposit, Gold, Silver etc.

Check other asset class per year return?  And also impact of Inflation and taxation on each asset class return.

Inflation and Taxation are two silent killer of your wealth.

Taxation impact for each asset class and for your wealth, we can work out the return after taxes too. FD would automatically turn negative. Gold and Silver would have provided a negligible return. Only equity would have provided a real rate of return of around 9% per annum.

History and experience of equity markets suggests that in the long-term equity markets are likely to “compound your capital” at approximately 12%.

In my opinion, if you have already lost an opportunity to make money in the last 38 years, when stocks and the Sensex (stock market) have multiplied many times, you need to be disciplined and become an investor rather than a spectator or a trader.

Investors who missed this wealth-creation opportunity should invest now.

Be an Investor!

Please go through the table. I’ve tried my best. Feel free to write your opinion and feedback.

 

“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.” ~Warren Beffett

 

Disclaimer: The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and have not been authenticated by any statutory authority. The author and www.rupakumarpradhan.com do not claim it to be accurate nor accept any responsibility for the same. The views constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. Please read the detailed disclaimer of the web site.

 

I am a CERTIFIED FINANCIAL PLANNERCM. For the moment, I have shared my experience growing up with you because it had a tremendous impact on how I do what I do.

If you have a question about your own financial situation please connect with me.  I’d be delighted to try to be of service.

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About Author

Rupakumar

Rupakumar

Mr. Pradhan has over 22 years of experience in financial services industry. He was previously working with leading Life Insurance Companies, Broking Firms, Distribution Company, Financial Planning Company and Health Insurance Company. He has cleared several NCFM modules & is also AMFI Certified. His expertise is in Comprehensive Financial Planning, Technical Analysis, Portfolio Management, Investment Advisory, Wealth Management & Business Development.

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3 Comments

  1. sandeep
    sandeep July 02, 05:35

    very well done Rupkumar your 38 years chart is so lucid yet so powerful.

    Reply to this comment
  2. Nirmal
    Nirmal July 12, 18:41

    Please provide Sensex returns chart till 2018

    Reply to this comment

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