Why we should invest in equity market?

Equity is the only investment which gives inflation adjusted tax free high returns over a long period.

For example a person who invests 10000 today in stock market will have 67000 in 20 years assuming a 10% average annual return, where as the same investment in bonds at 6% a year will have about 32000 ,if you consider a 4% average annual inflation he will have less than 15000.That is the irony of so-called conservative investment strategy.

If you consider indian equity returns. Key indices Sensex and nifty had given over 17% annual returns over a period of 20 years (not to mention the 40% annual returns in last 5 years), where as you might have got a maximum of 9% taxable return in fixed deposites.If you consider a inflation of 4-6% people who invested in FD or savings account had really lost a lot of money.

So when any one says investing in equity is risky i feel very awkward , according to the above statistics avoiding equity is a lot more risky and recklessness.


It is quite evedent that just to avoid regret aversion which might happen in short term perople are losing long term potentially high returns in equity markets .

RK