iCharts Discussions

[umesh1]

Thanks raynor
Ask the layman to rank Fixed Deposits, Gold, Real Estate, and Investing (long term) in the stock markets in order from highest returns to lowest returns.

How many do you think would pick the stock markets?

It’s an interesting question, isn’t it. Let’s pose the question a different way: how many friends/family members do you know who own residential property? What about gold? Fixed Deposits? And finally, how many friends/family do you know who have invested in the stock markets?

My guess is that you know more friends who have invested in, say, property and real estate than the stock markets.

And that’s a shame! Because in the past 5 years, residential prices across the top 10 cities in India went up, on average, 50%; this comes out to 8% annually. The stock markets, meanwhile, have gone up- on average- 64% over the past 5 years.

64% versus 50%. Simple math, right?

And then you look at the ease of investing in stocks. You can do it within seconds on your smartphone on a crowded train. Purchasing a residential property in a stress-free manner?

Forget about it!

And what about gold? Well, gold prices, in INR, went up 46% over the past 5 years. But what’s interesting about gold is that, while it is without a doubt a great investment compared to, say, diamonds or other minerals that can be artificially produced and are thus artificially kept in high demand, gold cannot be reproduced- making it a true investment. But have you tried selling gold? Unless you purchased the gold purely as an investment, not as jewelry, you are not going to get the kind of value you paid for it.

Simply put: an investor buys gold for the content of gold inside it; therefore, it is pure gold. Jewelry, on the other hand, definitely has value in it- but the price it is sold at is in the hands of the jeweler, no matter how charismatic or charming the jeweler might be The reality is that the price will be inflated beyond the content of the gold because you are not just paying for the gold; you are also paying for everything that comes with showcasing the jewelry made with gold.

And so, when someone asks you why you invest in the stock markets- ask them why they are wearing their gold watch in their newly purchased home

Cheers,

[pkholla]

Umesh: Keep enlightening us. Prakash Holla