Given below is the comparative returns on Sensex (Equity), Fixed Deposit (Debt), Gold and Silver and the impact of inflation on them beginning from the financial year 1979-80. Why 1979-80? That is the year from which Sensex came into existence with base as 100.
1. If gold, like other assets, has to be acknowledged as an investment for wealth creation during our own lifetime, its long-term returns cannot be ignored for comparison.
2. Hence sharing a published comparative 37-year CAGR data from 1st Apr'80 - 31st Mar'18 along with lowest / highest / latest YoY changes:-
a) CPI inflation - 7.04% CAGR
lowest:3.54% ('05-'06)
highest:12.5% ('10-'11)
latest:4.71% ('17-'18)
b) Silver per kg - 7.88% CAGR
lowest:(-)32% ('92-'93)
highest:107% ('10-'11)
latest:(-)9% ('17-'18)
c) Gold per 10g - 8.46% CAGR
lowest:(-)14% ('97-'98)
highest:37% ('05-'06)
latest:7% ('17-'18)
d) Fixed Deposit - 9.11% CAGR
lowest:5.25% ('03-'04)
highest:12% ('05-'06)
latest:7% ('17-'18)
e) PPF - 9.64% CAGR
lowest:7.3% ('10-'11)
highest:12% ('86-'00)
latest:7.8% ('17-'18)avg
f) BSE Sensex - 16.49% CAGR
lowest:(-)47% ('92-'93)
highest:267% ('91-'92)
latest:11% ('17-'18)
3. Sensex has, therefore, enabled inflation-adjusted wealth creation, in addition to matching returns of other assets, over the past 37 years!
4. For mutual funds launched in 1993, for which data is available, 25-yr CAGR returns from their launch till 31st Mar'18 are :-
a) Balanced - 11%
b) Large&Midcap - 12%
c) Multicap - 15%
d) ELSS - 15%
e) Midcap - 20%
f) Largecap - 21%
5) Please use FD for contingency or emergency funds. Let gold be part of social requirement and not exceed 5% to 10% of investment portfolio. Silver is again part of only social or cultural needs. Equity is for building wealth.
6) Real estate would normally give returns better than fixed deposits but lesser than equity. There is no reliable long term data available for real estate. From what I understand from reading, in the long run, real estate can be expected to give 2% to 3% more than inflation. If inflation is 6%, we may expect a long term price growth rate of around 9%. By providing 16% for nearly 4 decades, equity has scored well over real estate.u
No comments:
Post a Comment