The Growth Of Profits & Its Rate Of Growth Is The Key To Make Profits By Investing . This is the magic used by all great investors from Wareen Buffet- world's richest person, Peter Lynch, Philip Fischer. You too can do so. How? Please read on.....
In A Growing Business Compounding Comes In. Compounding Is Just Like Magic. Its Magic Is That 25 Paisa Compounded At 100% P.A . over Thirty Years Becomes ( Take A Guess)- A Whopping Rs 23 Crores! But In Real World 100% Compounding Is Not Possible..
l But The Moot Point Is That In Equity, The Investor Has The Growth Of The Business On His Side To Ensure That Even A 10-15% Compounded Profit Growth Of His Business Would Increase The Share Price Of His Company Which In Turn Would Give Him A Decent Return Over A Period Of Time Above 5 Years. See Data Below To Understand The Profound Impact Of Compounding
COMPOUNDING AND ITS VARIATION WITH RATE OF INTEREST AND TIME PERIOD INVOLVED : ( COMPOUNDING P.A.)
RS 1 LAKH @5.5% AFTER 5YEARS=RS1.3LAKH AND AFTER 10YEARS=RS1.71LAKH
RS 1 LAKH@10 % AFTER 5 YEARS =RS 1.61 LAKH AND AFTER 10YEARS=RS 2.59 LAKH
RS 1 LAKH @15%AFTER5 RS2.01LAKH AND AFTER 10 YEARS =RS4.05 LAKH
AMT AT END OF 5 YRS@15 % COMPOUNDING =1.53 AMOUNT AT END OF 5 YRS@5.5 % COMPOUNDING
AMT AT END OF 10 YRS@15 % COMPOUNDING = 2.37AMOUNT AT END OF 10 YRS@5.5 % COMPONDG
THIS ILLUSTRATES THE MAGIC OF COMPONDG. AT HIGHER RATES FOR LONGER PERIOD .
IS THERE ANY DATA TO INDICATE THAT IT PAYS TO INVEST IN EQUITIES ?
SENSEX IN 1979= 118 ( WOULD YOU BELEIVE THIS FIGURE!)
SENSEX IN 2007 =21000,COMPOUNDED R.O.R=28 %
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