Why should you invest in stocks – part 2

In previous part of this article we talked about why losses occur in a portfolio of an investor:

http://ankurjainraj.blogspot.in/2014/10/why-should-you-invest-in-stocks.html

Now we shall tell you some well known names that have given superb returns over a period of time. (Some of these have also been recommended to our members). All of these companies have created their own brand over a period of time. We have collected data of last 10 years in below table:

Company	Price as on 25 Oct, 2004	Price as on 25 Oct, 2014              (Current Price)	Percentage Gain	Current Value of 1 lakh which was invested in 2004 (Tax Free)	Value of 1 lakh if invested in Bank FD (Taxable as per your tax bracket)
HDFC Bank	81	896	1006 %	11.6 lakhs	1.93 lakhs
Hero Moto Corp	425	3110	631 %	7.31 lakhs
Asian Paints	29	652	2148 %	22.48 lakhs
Pidilite	15	416	2673 %	27.73 lakhs
Tata Consultancy services	281	2465	777 %	08.77 lakhs
Hindustan Unilever	123	758	516 %	06.16 lakhs
Nestle India	541	6009	1010 %	11.1 lakhs
Sun Pharma	44	810	1740 %	18.4 lakhs

1 lakh invested in a fixed deposit at 9% interest would have returned you 1.93 lakhs after 10 years (excluding taxes) while investing in blue chip stocks could have fetch you returns ranging from 7.31 Lakhs to 27.73 Lakhs as shown in above table. These are companies that are well known and not hidden gems. However such returns from these stocks might or might not be possible in future but there are other set of companies that are on their way to give similar returns in future as well.

“It is important to do savings but it is very important to save your savings”

As we all know that inflation rate as per government is around 9-10% but in reality it is much more than this which we can easily see when we go to market to buy vegetables, fruits, milk, pulses and other essential things whose prices are higher after every few months!!.

So if we have 100 Rs and invested in Fixed Deposit which will give me 109 Rs (9% interest rate)  at the end of year but due to inflation the real value at the end of year comes out to be 94 Rs considering inflation rate at 15%.So, effectively the real value of your savings is de growing every year!!.

Hence it is highly recommended that one should invest a certain part of portfolio from their savings in equities to generate real wealth over a period of time.

http://ankurjainraj.blogspot.in/2014/06/stock-multibagger-ideas.html