The myth is equity investing is risky business. Find below a chart to show how it makes sense to stay invested in stocks in the long run. Holding stocks for a year or so may give negative returns but if held for more than 5 years returns have always been positive. (Even in 2008 when the markets crashed). So equity investments are not that risky if held for more than 5 years. If we have a good portfolio of stocks timing doesn’t matter, if held for more than 10 years expect double digit returns. To top it all the chart below only shows index returns & stock portfolios outperforming the index will give higher returns. Please note that returns calculated are only on the principle and not dividend, if included returns will be higher.
| SENSEX Returns over the last 19 years | ||||||||
| Returns (%) | ||||||||
| Date | SENSEX | 1 | 3 | 5 | 7 | 10 | 12 | 15 |
| Year | Years | Years | Years | Years | Years | Years | ||
| 27-Nov-98 | 2782 | |||||||
| 26-Nov-99 | 4705 | 69.13 | ||||||
| 27-Nov-00 | 3969 | -15.64 | ||||||
| 27-Nov-01 | 3288 | -17.17 | 5.72 | |||||
| 27-Nov-02 | 3174 | -3.45 | -12.3 | |||||
| 27-Nov-03 | 4989 | 57.18 | 7.92 | 12.39 | ||||
| 25-Nov-04 | 6035 | 20.97 | 22.44 | 5.11 | ||||
| 26-Nov-05 | 8889 | 47.29 | 40.95 | 17.5 | 18.05 | |||
| 27-Nov-06 | 13774 | 54.95 | 40.28 | 33.18 | 16.58 | |||
| 27-Nov-07 | 19128 | 38.87 | 46.89 | 43.22 | 25.19 | |||
| 26-Nov-08 | 9027 | -52.81 | 0.51 | 12.59 | 15.52 | 12.49 | ||
| 27-Nov-09 | 16632 | 84.25 | 6.49 | 22.48 | 26.7 | 13.46 | ||
| 26-Nov-10 | 19137 | 15.06 | 0.02 | 16.57 | 21.17 | 17.04 | 17.43 | |
| 25-Nov-11 | 15695 | -17.98 | 20.25 | 2.65 | 14.63 | 16.92 | 10.56 | |
| 27-Nov-12 | 18842 | 20.05 | 4.25 | -0.3 | 11.33 | 19.5 | 13.86 | |
| 27-Nov-13 | 20420 | 8.38 | 2.19 | 17.74 | 5.79 | 15.13 | 16.44 | 14.21 |
| 28-Nov-14 | 28694 | 40.52 | 22.28 | 11.52 | 5.96 | 16.87 | 20.14 | 12.81 |
| 30-Nov-15 | 26145 | -8.88 | 11.54 | 6.44 | 16.41 | 11.39 | 14.80 | 13.39 |
| 30-Nov-16 | 26652 | 1.94 | 9.28 | 11.17 | 6.97 | 6.82 | 13.18 | 14.97 |
| 29-Nov-17 | 33602 | 26.08 | 5.40 | 12.27 | 8.37 | 5.80 | 11.72 | 17.04 |
| No of Rolling Returns | 19 | 17 | 15 | 13 | 10 | 8 | 5 | |
| Negative Returns | 6 | 1 | 1 | 0 | 0 | 0 | 0 | |
Market valuations don’t matter in the long term
Retirement Planning – Invest Early, Invest Wisely
Sabyasachi Paul has been associated with equity research and advisory on equity markets in India for over 9 years & currently heads the equity research desk of Eastern Financiers Ltd, Kolkata.He also manages a portfolio on the online platform Kristal. Find link to the strategy named ‘The Tortoise’