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.
[blockquote style=”1″]History and experience of equity markets suggests that in the long-term equity markets are likely to “compound your capital” at approximately 12%.[/blockquote]
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.
[blockquote style=”1″] “Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.” ~Warren Beffett[/blockquote]
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