Home
Quotes New

Audio

Forum

Read

Contest


Write

Write blog

Log In
Category : Money
How long is 'Long Term' in Equity?
 Manoj Arora  
 16 March 2018  

For someone running the last 100 meters of a 42 Km marathon, one sec can seem to be quite a time. On the other hand, to change a simple habit in your life, a decade may seem quite small. Long Term, therefore, is a relative term in life. But it is not so in equity investments. Whether it is mutual funds or stocks, we can define Long Term quite precisely, clearly and objectively - with logical data points.Let us see how.'Being Dead' as an Investment StrategyFidelity Investments recently conducted a study in the US to find out what kind of investments provided the best returns. The results were startling for anyone who feels is a smart investor. The study revealed that the highest returns were from investors who had completely forgotten about their investment for years, or even decades. A good proportion of these investors who were enjoying amazing returns, had actually died a long time ago. The study, therefore, concluded that the most profitable strategy may be to do exactly what a dead person would do - which is nothing.Why should we define 'Long Term'?A long-term investment is often associated with lesserrisk. We just understood from the above study that the longer the term, the lesser the risk - since volatility is averaged out over a period of time.To augment our statement, just have a look at the last 5 year returns of BSE Sensex:9% , 42% , -9% , 16% & 10%The overall annual returns stand at 13%Now, 13% is a fabulous annual return on your investment - but the variability (volatility) is high. During any short period, you could face poor returns - or even losses (as in Year 3). These poor returns are (over)compensated by a great occasional phase (as in Year 2). As you increase the term, the risk will keep reducing. But how long should we keep increasing the Term of investment? For sure, we do not want to die just trying to get good returns. We want to get the returns and use them too - in this lifespan. Isn't the purpose of an investment to get the returns and use the money as well as the returns arising from it? What use is the money if it just keeps growing and you die of old age? The end purpose of money and investments was always to spend it optimally, so as to facilitate happiness in our life.Therefore, to strike a balance, we must define a Long Term investment tenure where we have a fairly reduced risk and we can also use the investment and the returns for the purpose it was intended to. Thus, we should be able to precisely answer the question, "How long is long-term in Equity?"How does our Law define 'Long Term'?Tax Laws are often quite strange, to say the least. Indian IT Act defines Long Term on equity investments after a period of 1 year (12 months). So, does that mean that any equity investment done for more than a year is a truly long-term and therefore, relatively quite safe?Not really!Ironically, on the other hand, any investment done in debt based funds are considered as long-term from a taxation perspective only if you stay invested for at least 3 years. So, are we saying that debt investments are riskier as compared to equity investments - and therefore need a longer duration to average out the risk? It is actually the reverse. Debt based investments are less volatile and therefore less risky as compared to Equity investments.So, we cannot go by the definition of tax laws to define the right tenure of any Long-Term Investments.Defining 'Long Term' logicallyIf you analyze the data for a typical mutual fund with a multi-decade history over all the possible 1 year periods, you will find that:a) Maximum returns are 160% (best 1-year return ever)b) Minimum returns are -57% (worst 1-year return ever)If you analyze the data for a typical fund with a multi-decade history over all the possible 2 year periods, you will find that:a) Maximum returns are 82% (Annualised best return ever - over 2 years period)b) Minimum returns are -34% (Annualised worst return ever - over 2 years period)If you analyze the data for a typical fund with a multi-decade history over all the possible 3 year periods, you will find that:a) Maximum returns are 63% (Annualised best return ever - over 3 years period)b) Minimum returns are -18% (Annualised worst return ever - over 3 years period)If you analyze the data for a typical fund with a multi-decade history over all the possible 4 year periods, you will find that:a) Maximum returns are 59% (Annualised best return ever - over 4 years period)b) Minimum returns are -8% (Annualised worst return ever - over 4 years period)If you analyze the data for a typical fund with a multi-decade history over all the possible 5 year periods, you will find that:a) Maximum returns are 54% (Annualised best return ever - over 5 years period)b) Minimum returns are 4% (Annualised worst return ever - over 5 years period)This means that the minimum annualized returns you could have made annually if you would have invested in the worst possible fund would have been 4%. Do not go by the dwarf-ness of 4% CAGR. Try and understand the significance of this statement. Here is the crux. There was no feasible way that you could have made any loss in equity market if you would have stayed invested for 5 years - since your returns were going to be between 4% and 54%.Let us just go one step ahead.If you analyze the data for a typical fund with a multi-decade history over all the possible 10 year periods, you will find that:a) Maximum returns are 30% (Annualised best return ever - over 10 years period)b) Minimum returns are 13% (Annualised worst return ever - over 10 years period)Wow !! A worst-case annual returns of 13% !!What else you want equity investments to deliver to you? Of course, that is if you stay invested for 10 years.The above statistics clearly puts the minimum term of investment to be 5 years and the optimum term of investment in equity to be somewhere between 5 and 10 years i.e. 7 years and above. 7+ years is an investment term wherein you get good enough returns with significantly lesser risk.Therefore, in equity investments - long term is not a vague term. It is 7 years+ investment horizon - also validated by 7-year equity cycles.CheersManoj AroraOfficial Website | My Mission

GOSSIP LOSS
 Mantri Pragada MARKANDEYULU  
 15 November 2018  

Gossip Loss in terms of finance, is always there.

दस रुपये के नोट से लखपति
 Rohit Verma  
 15 May 2019  

एक सम़य की बात है, एक दिनेश नाम का युवक रहता था !वह काफी गरीब था, परिवार की जिम्मेदारी दिनेश के हाथों मे थी !कभी-कभी ऐसा भी होता खाने को कुछ नही मिलता था ! एक दिन रास्ते से वह जा रहा था, उसको 10 रुपये का नोट मिला। वह देखकर खुश इतना नहीं हुआ क्योंकि दस रुपये में उसका क्या होने वाला हैं। तो वो सोचता है- क्या किया जाए।उसने दस रुपये के नोट से एक लॉटरी खरीदी जिसका नम्बर भी दस था। वह अखबार में लॉटरी का नम्बर देखा। वह हैरान रह गया कि लॉटरी में उसका इनाम निकला हैं तो भागते भागते घर गया।परिवार वालो को ये बताया। परिवार वाले काफी खुश हो गए पर लड़कियों की शादी के लिए जो पैसे जोड़े थे, वह लोग खुशी खुशी में वह खर्च कर दिये, अगली सुबह वह लॉटरी लेकर जहाँ से खरीदी थी वहाँ गया और लॉटरी वाला काफी हँसा क्योंकि उसकी कोई लॉटरी नही निकली थी। वह लॉटरी वाला नंबर दिखाता 01 उसका नंबर था 10 वह बोला तुमने लॉटरी ढंग से नहीं देखी। वह गरीब आदमी काफी पछताता है ! वह कहता है कि अगर नहीं खरीदता तो सही रहता नुकसान भी नहीं होता !शिक्षा :- हमेशा पूर्ण जानकारी लेनी चाहिए अधूरी नहीं !

CertsPDF -> {2019/Oct} Realistic & Correct PDT-101 Braindumps PDF, Exam PDT-101 Q & A
 Emma Shens  
 2 October 2019  

Get Success in first attempt with Latest PDT-101 DumpsIf you want to pass out the Salesforce Exam with a lot of ease, we at CertsPDF.com are there to help you out in this regard. We design the flawless PDT-101 study material which has the complete guidance from A to Z. The well-sequenced and in great order information will help you learn the whole course content easily. Technical certifications should be given special attention in order to get full advantage in terms of career and success. We provide such PDT-101 braindumps that builds interest in you rather than making you feel strained out. The comprehensive guide will let you become successful in first try. You will enjoy every minute of preparation if you choose our mind-blowing PDT-101 exam dumps.Buy our PDT-101 Exam Questions for Exam PreparationWe guarantee you that if you use our exam questions you will be fully prepared for the different types of actual questions in the exam. Also, we add the correct answer with details in our PDT-101 question answers section. This would be great help to increase your knowledge. The format of the course content is in PDF and is user-friendly. The easy availability of the exam material saves a lot of time and saves students from stressing out. You can download it in your phones, laptops or any smart gadget. As it would be easily accessible to anytime, you can easily take out time for studying. You can study in the car or even when you get break in the office. We have made it convenient for everyone to get successful.Now next question coming to your minds must be regarding the price of this highly efficient product. We are very lenient in that as well. We are not offering it in a high price. Our PDT-101 dumps pdf is economical. We care for everyone and provide maximum comfort that we can. We promise you that your amount will be justified with our exceptional quality product.Verified PDT-101 Practice QuestionsOur IT team is extremely talented and they have years of experience. They design the perfect practice questions that helps to take the actual exam with great confidence. We make sure to provide the latest knowledge instead of old information which is no longer in practice. Such quality content in low price is very difficult to find anywhere else. Furthermore, our study material is the extract of the best knowledge in this field and hence you will not need any separate course material to master the skill. Because our learning material is best in the town.Key Features of our PDT-101 DumpsWe offer free of cost updates up till three months. We make our clients comfortable by letting them watch our free of cost demo which shows salient properties of our product. Money back guarantee is also part of the package. The failing candidates do not have to worry because they can claim their money back.https://www.certspdf.com/Salesforce/PDT-101-dumps-pdf