Equities is probably the only asset class that has globally always outperformed most other classes of investments – definitely over 5 year periods and in growing economies – and delivered positive returns post inflation.
The table below has been circulating recently in social media and beautifully captures the returns from various asset classes.
This happens due to a multitude of factors not least of which is the market’s tendency to generate returns in line with nominal GDP Growth – which is nothing but Inflation Plus the Real GDP growth.
Given that Indian inflation has been historically in the range of 6%, and we remain an import/ weather dependent nation with growing aspirations, it is unlikely that consumer inflation will remain lower than this. And given that India is expected to continue to grow at above 7% on a decadal basis, it is likely that Indian markets will deliver upwards of 13%-14% over the next decade as the demographic dividend from 40 crore plus Millenials starts paying off.
Of course markets will remain volatile. To counter that, simply start an SIP for the next 15 years which can, at 15% for 15000 Rupees invested a month, can turn your investments into Rs 1 Cr! And choosing a good fund manager (Our recommended funds are available here can add that extra to your returns as well!
For calculating returns under various scenarios, do use our Financial Calculators section on our website. Write to us at firstname.lastname@example.org if you need any assistance or support!