When it comes to equity investment, many of us are living in DREAM than understanding REALITY. Recently I came across a tweet where it was assumed the past Nifty 50 performance of 13% to 14% returns. Based on that, the rosy picture of compounding was created and showcased how easy it is to create wealth by just assuming past returns of Nifty. It is nothing but a half-baked truth.
Basically, the tweet was as below.
If you are investing 30k per month, the first 1 Cr will take about 12 years (assuming 13-14% CAGR in line with nifty 50 historical returns). The 2nd crore will take only 4 years The third crore: only 2 yrs
And…. That’s compounding! Money makes money.
Amazingly it is TRUE on paper. However, the journey of these 12 years (where you accumulate the first one crore) and later on the remaining 6 years journey (in total 18 years journey) is not so smooth as these FINANCIAL INDUSTRY EXPERTS teach us.
In my earlier posts also, I have showcased that to…