It’s appalling that Indian investors have by and large ignored the long term wealth creation possibilities of staying invested in equities, both stocks and mutual funds, by displaying utmost (and blind) faith towards real estate as a long term asset.
For most families it has been centuries old traditionto invest in real estate as an investment (other than self-dwelling property) and stay invested for decades; it maybe redoubtable that real estate can offer good return on investment, but should equities be ignored at the cost of ignorance?
Let’s see the performance of equity mutual funds over a period ranging from 20 years onwards; assuming Rs.10 lakhwas invested and the wealth it would have created in these years.
|MUTUAL FUND NAME||LAUNCH DATE||No. OF YEARS||INVESTED AMOUNT||VALUATION (NOV 2018)|
|Franklin India Prima Fund||Dec-93||25||Rs.10 lakh||Rs.9.07crore|
|Franklin India Bluechip Fund||Dec-93||25||Rs.10 lakh||Rs.4.42crore|
|Franklin India Equity Fund||Sep-94||24||Rs.10 lakh||Rs.6.67crore|
|HDFC Equity Fund||Jan-95||24||Rs.10 lakh||Rs.7.32crore|
|Aditya Birla SL Equity Hybrid '95 Fund||Feb-95||24||Rs.10 lakh||Rs.8.68crore|
|Reliance Growth Fund||Oct-95||23||Rs.10 lakh||Rs.10.26crore|
|Reliance Vision Fund||Oct-95||23||Rs.10 lakh||Rs.7.13croree|
|HDFC Tax Saver Fund||Mar-96||23||Rs.10 lakh||Rs.6.89crore|
|HDFC Top 100 Fund||Sep-96||22||Rs.10 lakh||Rs.4.56crore|
|ICICI Pru Large & Mid Cap Fund||Jul-98||20||Rs.10 lakh||Rs.3.11 crore|
|Aditya Birla SL Equity Fund||Aug-98||20||Rs.10 lakh||Rs.7.00crore|
• Note: Schemes have been mentioned in order of launch; NAV to NAV lump sum performance considered on CAGR basis since the launch of the respective mutual fund schemes; valuation as on 30.11.2018; nearest year considered
These dozen equity mutual fund schemes are a mirror to the possibilities of equity as an asset class over long term.
Significant differences between real estate and equities are
With direct stocks too the returns over longer duration has been phenomenon with stocks such as Infosys, TCS, Wipro, MRF, Page Industries, Havells, Pidilite, Asian Paints, HUL, ITC, Maruti, Cipla and the likes that have created infinite wealth. While picking such stocks is quite challenging for common investors, the ideal option is to choose equity mutual funds instead. The real game changer would be to stay invested with similar durations just like traditional asset classes.
The young creed of investors should definitely consider equities for really long term of staying invested and reap the power of compounding benefits.