Historical data suggests that a long-term investment horizon of at least five to seven years can help investors weather market fluctuations and benefit from the power of compounding. However, individual circumstances may warrant a longer or shorter investment horizon. A FundsIndia study shows that Indian equities have outperformed all other asset classes over the long term and have delivered a return of 16 per cent over 20 years.
FundsIndia’s report — Wealth Conversations August 2024 — has an interesting insight: If you had invested in a basket of NIFTY 50 stocks any day since June 30, 1999, and remained invested for a minimum of 7 years, you would have earned more than 10% returns 83% of the time, as reflected by the NIFTY 50 TRI.
Analyzing the Nifty 50 index over the last 23 years, the study reveals a strong correlation between investment horizon and returns.
Key findings:
Consistent Returns: In 98% of the seven-year investment periods, returns exceeded 7%.
Higher returns with longer horizons: Investment periods of 15 years or more have consistently generated returns above 7%.
Market volatility: While the market experiences fluctuations, long-term investors are better positioned to weather these storms.
Historically, Indian stocks have outperformed inflation by six to eight percent.
First published: August 14, 2024 | 8:45 a.m. IS
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