The cornerstone of all advice on personal finance is that equity is the best class of asset in the long run. The numbers don't lie and nor does history, for that matter.
Investing in the Indian equities market over the past decade or so could easily have gotten investors gains of around 18 per cent per annum, and 18.5 per cent in the Sensex, to be precise.
In practice, a number of equity funds that have been around for a decade have done better and many have done substantially better.
Add the systematic investment plan (SIP) to the mix and the picture becomes even rosier, with the Sensex itself returning around 22 per cent. In fact, many equity funds have far higher rates of returns, in the 25-30 per cent range. These kinds of returns sustained over a decade or more are capable of producing serious wealth without much of an effort.
Over the past 10 years, a saving of Rs 20,000 a month at typical fixed income interest rates would have left you with Rs 36 lakh while a SIP in a typical equity fund would have left you with around Rs 1.2 crore. That's the kind of differential that can change someone's life.
