Introduction
Company Info
Investment Philosophy
Why Invest?
Why Invest in shares?
When should one start investing
in shares?
Why Invest Shares?

Investing in equity shares is like to owning part of a business. A profitable business keeps ploughing back profits to earn more profits or rather "compounding profits".

Hence unlike investing in assets like gold, which are not productive, investing in shares, which represent ownership in productive assets (business), hold very high upside potential.

The "power of compounding" is what makes investing in stocks very attractive. In very simple terms it means that the returns on the principal also earn returns. In other words, Rs 10,000 that earns mere returns of 20% per annum becomes Rs 30,000 in ten years whereas Rs 10,000 compounding at 20% per annum turns out to be Rs 62,000 in ten years!

As you stretch the time horizon, your money appreciates further. Compounding at 20% per annum Rs 10,000 becomes Rs 62,000 in ten years, Rs 1,54,000 in 15 years and Rs 3,83,000 in 20 years. Hence the longer the duration of investment, the better are the returns.

If you top your original investment with regular savings, the return would be exponential, as you can see in the table given below:

The Power of Compounding with additional savings

Year Investment Return @ a modest 20% Additional Investment annually Total Amt. to be carried forward to next year
1 10,000.00 2,000.00 10,000.00 22,000.00
2 22,000.00 4,400.00 10,000.00 36,400.00
3 36,400.00 7,280.00 10,000.00 53,680.00
4 53,680.00 10,736.00 10,000.00 74,416.00
5 74,416.00 14,883.20 10,000.00 99,299.20
6 99,299.20 19,859.84 10,000.00 129,159.04
7 129,159.04 25,831.81 10,000.00 164,990.85
8 164,990.85 32,998.17 10,000.00 207,989.02
9 207,989.02 41,597.80 10,000.00 259,586.82
10 259,586.82 51,917.36 10,000.00 321,504.19
11 321,504.19 64,300.84 10,000.00 395,805.02
12 395,805.02 79,161.00 10,000.00 484,966.03
13 484,966.03 96,993.21 10,000.00 591,959.23
14 591,959.23 118,391.85 10,000.00 720,351.08
15 720,351.08 144,070.22 10,000.00 874,421.29
16 874,421.29 174,884.26 10,000.00 1,059,305.55
17 1,059,305.55 211,861.11 10,000.00 1,281,166.66
18 1,281,166.66 256,233.33 10,000.00 1,547,400.00
19 1,547,400.00 309,480.00 10,000.00 1,866,880.00
20 1,866,880.00 373,376.00 10,000.00 2,250,256.00
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