At every available opportunity, we keep reinforcing the need to invest regularly for long term without timing the market.
I saw an advertisement by HDFC mutual fund and felt like sharing the data published in the same with you.
Let us assume you invested Rs.10,000 in Sensex on January 1’st 1990 and stayed invested till September 30th 2014.
Your money would have multiplied 34 times providing an annualized return of 15.30%.
In these 25 long years, if you’ve missed just 10 best days of the market, your money multiplied only by 12 times, giving an annualized return of 10.73%
If you’ve missed the best 20 days, the returns would be on par with fixed deposits; your money multiplying by 6 times, giving an annualized return of 7.65%
If you’ve missed the best 30 days, the returns would be on par with what some banks offer for SB A/C; your money multiplying by 3 times, giving an annualized return of 5.09%.
If you’ve missed the best 40 days, you barely scraped through with a positive return; your money multiplying by 2 times, giving an annualized return of 2.78%
In fact, in the last 3 scenarios, you wouldn’t have beat inflation- which means your real return is negative.
The best way to build wealth is to choose a long term (not less than 10 years), invest regularly and stay invested for the entire tenure. Hopping in and out of the market can make you miss some best days which would significantly dent the returns you would have obtained by simply staying the course.
I saw an advertisement by HDFC mutual fund and felt like sharing the data published in the same with you.
Let us assume you invested Rs.10,000 in Sensex on January 1’st 1990 and stayed invested till September 30th 2014.
Your money would have multiplied 34 times providing an annualized return of 15.30%.
In these 25 long years, if you’ve missed just 10 best days of the market, your money multiplied only by 12 times, giving an annualized return of 10.73%
If you’ve missed the best 20 days, the returns would be on par with fixed deposits; your money multiplying by 6 times, giving an annualized return of 7.65%
If you’ve missed the best 30 days, the returns would be on par with what some banks offer for SB A/C; your money multiplying by 3 times, giving an annualized return of 5.09%.
If you’ve missed the best 40 days, you barely scraped through with a positive return; your money multiplying by 2 times, giving an annualized return of 2.78%
In fact, in the last 3 scenarios, you wouldn’t have beat inflation- which means your real return is negative.
The best way to build wealth is to choose a long term (not less than 10 years), invest regularly and stay invested for the entire tenure. Hopping in and out of the market can make you miss some best days which would significantly dent the returns you would have obtained by simply staying the course.
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