Known as the “Oracle of Omaha” Warrant Buffet is an investment guru and one of the richest and most respected businessmen in the world. He is the most successful investor of the 20th century. He has generated CAGR of 25% on his investments for which he still feels that he started investing late.
Investing in equity is Interesting & Enterprising. Everyone by nature are enterprising, wants to do business, interest in equities generally is by default. All wish to invest but they don’t have right advisors.
Investing in Equity is Adventurous & Exciting: Adds life to years. Sometimes our life gets monotonous and there is lack of excitement in our work life. With stock market, there is sense of excitement which comes into our life. There is no life in years, equity adds life to our years.
Investing in Equity is Greatest Risk. The greatest risk in stocks is “not owning them”. The annual percentage returns post tax realized on an investment, which is adjusted for changes in prices due to inflation or other external effects. This method expresses the nominal rate of return in real terms.
For example, let’s say your current Fixed Deposits pays you interest of 8.5% annually and you come under the 20% to 30% tax slab then the rate could be 6.8% to 5.95% post tax. And then consider a current inflation which is around 6%. Then your money is actually generating no return or a negative return. Interest rates are headed down in future. In that case we are actually staring at negative real returns on our money. There would be an erosion of money in terms of purchasing power. Equities are a real hedge against inflation.
Investing in Equity is Hassle-free. No Income Tax, No Sales Tax, No Profession Tax, Excise, Octroi, etc. Only Short or Long term Capital Gains tax. Tax is 10 - 15% for short or long term investments.
Investing in Equity is Profitable. The fear of losing money has always been on investors’ minds. This common human trait is captured in the movie “Wall Street” when Gordon Gekko says “Nothing ruins my day like losses”. Behavior economists have a name for this normal phenomenon, loss aversion. If finding a dollar on the sidewalk gives you a momentary thrill, but losing 50 cents through a hole in your pocket bugs you all day, you have experienced it first-hand. When investors come under the influence of this trait, behavioral scientists and financial experts say it can lead to poor investment choices.“People naturally have this fear of losing money and it affects what would otherwise be rational judgment.” says Robert Koppel author of “Investing and the Irrational Mind.”
Investing in Equity is Advantageous. It’s Flexible – You can easily change company which is not possible in actual business. It is the Best among all alternatives.
DESPITE PAST OPPORTUNITIES, THE FUTURE HOLDS MORE PROMISES.