Positive Sensex Returns in the Long Term: A Strong Case for Investment in Equity

Sensex has provided positive returns in the Long Term….even better if you consider that alternative and much safer Investment avenues like Bank Fixed Deposits would have given a lower post tax return of below 7% pa

If you had remained invested till date from 1991,2001 or 2004 the CAGR is 13.5%,12% and 6.5% respectively

Interestingly if you had rode the Bull Run from 2001 or 2004 and dismounted earlier this year in January you would have got a marvellous CAGR of 27 % or 38 %  for a Seven Year or  Four Year Period respectively

I have taken the Opening Sensex levels in the Years 1991(Modern Reforms initiated ), 2001 (Turnaround Year after ICE meltdown in early 2000) and 2004 (beginning of a strong 4 year Bull run) and computed the Absolute and CAGR % returns over 18,17,8,7,5 and 4 years from these Opening levels to the High of 21207 reached  earlier this year on January 10, 2008,to the intra day low of 7697 reached on October 27,2008 and the October 31,2008 closing of 9788

 

From

SENSEX RETURNS

ABSOLUTE

&

CAGR

Year

Opening Sensex

High

21207

Jan 10,2008

Low

7697

Oct 27,2008

Current

9788

Oct 31,2008

 

1991

 

1027

17 years

1965 %

19.5 %

 

18 Years

649 %

12 %

18 Years

853 %

13.5 %

 

2001

 

3990

7 Years

432%

 27 %

 

8 Years

93 %

8.5 %

8 Years

145 %

12 %

 

2004

 

5872

4 Years

261%

38 %

5 Years

31 %

5.5 % 

 

5 Years

67 %

6.5 %

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