Invest in equity for long-term financial success 

In today’s world, most of us are trying to make money by working as an employee in one company or the other. But if we fail to realize the powerful employee who can bring more money for us then he will become a terrible master who’ll make us work for him throughout our life. He is none other than “Mr. Money”. If we employ “Mr. Money” in an asset where he will grow faster than inflation, he will bring more money and free us from working for money.  

Why is investment a key requirement for financial growth? 

Investment is a key requirement for financial growth because it allows individuals, businesses, and economies to generate income and build wealth over time. By allocating resources to productive assets, investments can yield returns and contribute to overall economic prosperity. While there is risk involved in investing, not investing is also risky.  

Numerous alternative investment options are available to meet the diverse needs of investors across the globe. Bank deposits, gold, real estate, bonds, and equities are just a few of the many investment options. 

Also read: Digital transformation in the world of securities and capital markets 

What makes equity the most promising investment option? 

Previous studies proved that equity investment is the most promising avenue that gives better returns in the long run. However, investing in equity involves higher risk and complication. This is mainly because equity share prices fluctuate in a short time. But, in the long run, if the business performs well, the equity share price will increase and give a better return.  

For example, since the beginning, BSE Sensex (a free-float market-weighted stock market index of 30 well-established and financially sound companies listed on the Bombay Stock Exchange) moved from the base value of 100 in 1979 to 61000 in 43 years. This is a Compound Annual Growth Rate of 16.08% which is a stunning performance compared to any other asset class during this period. However, Sensex ended with negative returns many times during these four decades, mainly due to the Harshad Mehta scam and market manipulation. The stock market registered stunning performance in 1991, and it collapsed when the news broke out in 1992.  

Similarly, in 2000, several tech companies have achieved great success in stock markets which also collapsed sooner. The stock market wiped out large sums of investors’ wealth during 2007-08 due to the US financial crisis and its aftermath. In the recent past, we have witnessed the Covid-19 impact on the stock market across the globe.  Despite having these many setbacks and turbulence since 1979, Sensex delivered a better return than any other asset class in the past four decades. The return has been calculated without considering the dividend yield. The below table presents the current value of ₹ 10000 invested in Sensex every year from N years ago. 

Present value of yearly investment of ₹ 10000 which was started from N-years ago. 

Source: Data collected from Bombay Stock Exchange and calculated.  

Every one of us wishes to have a bright future. But the future lies in what we are doing today and not what we will be doing tomorrow. So, to have a financially sound future, start investing your money wisely from today. 

Check out: Fiscal policy of India: Union budget 2023-24 

Develop a better understanding of investment products with an online BCom/MCom from MUJ 

The most complicated process in equity investment is to identify the company for long-term investment. To find a potential firm to invest in, one requires a good education in accounting, finance, and various business operations. One of the best ways to acquire the skill set to become a stock picker is to enroll in BCom / MCom courses. Directorate of online Education, Manipal University Jaipur (MUJ), offers UGC entitled online BCom and MCom courses for all those who are interested in learning accounting and finance without taking a break from their regular job or profession at affordable cost.