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Monday, July 23, 2012

Power of Investing in Stock Market

Power of Investing in Equities - Unbelievable but it’s a fact!

Just Imagine...

How much can you make in 32 years by just investing Rs.10,000 initially in any of financial instruments?

Take a wild guess ???

Let us look at the real example…

If you have subscribed for100 shares of "X" company with a face value of Rs. 100 in 1980.
  • In 1981 company declared 1:1 bonus = you have 200 shares
  • In 1985 company declared 1:1 bonus = you have 400 shares
  • In 1986 company split the share to Rs. 10 = you have 4,000 shares
  • In 1987 company declared 1:1 bonus = you have 8,000 shares
  • In 1989 company declared 1:1 bonus = you have 16,000 shares
  • In 1992 company declared 1:1 bonus = you have 32,000 shares
  • In 1995 company declared 1:1 bonus = you have 64,000 shares
  • In 1997 company declared 1:2 bonus = you have 1,92,000 shares
  • In 1999 company split the share to Rs. 2 = you have 9,60,000 shares
  • In 2004 company declared 1:2 bonus = you have 28,80,000 shares
  • In 2005 company declared 1:1 bonus = you have 57,60,000 shares
  • In 2010 company declared 3:2 bonus = you have 96,00,000 shares
In 2010, you have whopping 9.6 million shares of the company.

Any guess about the company? (Hint: Its an Indian IT Company)

Auy guess about the present valuation of Rs 10,000 invested in 1980?

The company which has made fortune of millions is "WIPRO" with present valuation of 342 Crore (excluding dividend payments) for Rs. 10,000 invested in 1980.

Unbelievable, isnt it? But its a Fact! Investing in companies with good fundamentals and proven track record can give far superior returns compared to any other asset class (real estate, precious metals, bonds etc) in a long run.

Will Wipro provide similar returns in next 32 years? Probably not, its already an IT giant.

You need to explore companies in small and mid cap space with good track record and stay invested to create wealth  in a long term.
At Saral Gyan, team of equity analysts keep on exploring good companies with sound fundamentals in small & mid cap space. Saral Gyan team offers Hidden Gems (Unexplored Multibagger Small Cap Stocks) and Value Picks (Mid Cap Stocks with Plenty of Upside Potential)

Also Read: 4 Hidden Gems which Doubled Investors Money in 1 Year

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