When I ask people what they expect from their investments, their first answer is ‘profits’. So I now have to be more accurate in my questioning…

One of the questions is ‘What returns do you expect on a realistic basis from your investments?’

Obviously in nsc and ppf they know the answer…but when it comes to equity, the answers are amazingly WRONG…

Very few people ‘expect’ to get returns in the range of say 15%. Most people have expectations in the region of 20% to 40%.

The gender of the person does not matter at all – women are as greedy as men, age does not matter – maybe older people need to earn it faster…not sure!

Please have ‘reasonable expectations’ – the Japanese economy grew at 10% for 10 years, then at 5% for 10 years..and then at 2% for….

In the Indian context we have seen a great double digit growth over the past few years…however any expectation by the investor which is in excess of 13-14% p.a. for the next 10years is foolishness.

Of course if the ‘adviser’ tells you that it is possible to get more than 20% p.a., it is not just wrong, but almost a fraud!

 

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  1. I would expect returns double of debt-schemes. If Fixed deposit gives me 8%, I would expect equity to return at least 16%. Otherwise why I should invest in equity at first place? I would be better of with FD which is almost no risk.
    I feel that equity in Japan must have returned at least double of returns given by debt-schemes there.

  2. I bought 5000 shares of Reliance petroleum in 2005 for Rs 5.5 Lakhs. Then it got converted to RIL in the ratio of 1:16 (if I remember right) it was followed by a bonus issue of 1:1. Today my shares are worth Rs 6.2 Lakhs – after 6 years. Even a savings account would have given me a better return.. So much for the best stock in India and equity markets.

    Ofcourse I have made money through SIPs. Equity is not everything, as my personal experience suggests.

  3. Sanjay thanks to the super bull run from 2002, my expectations from equities for the next 20 years of my life is about 12%p.a. Assumption is inflation will be about 6-7%, and the economy will grow at 5-6%. The premium of my portfolio over the economy growth rate is ZERO. Obviously this has been possible because some portions of my portfolio have done 3X the index, but going forward not sure what will happen. Historically 2X the debt market (not debt schemes) has not happened over long periods of time, and frankly history will do the same again – that is my guess. If my portfolio does better than what I expect, more of my money can go to debt products. Can, may not.

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