The Truth About Equity Returns for Indian Investors

Investing in equity can be a rollercoaster ride, and it’s essential for Indian investors to understand the nuances behind the numbers. While many believe that equity consistently provides a 12% return, the reality is quite different. Equity investments are known for their volatility, rewarding those who exhibit patience and a long-term vision.

When we refer to a return of approximately 12%, we are talking about the long-term compound annual growth rate (CAGR), not the annual returns. Over the years, investors will experience significant fluctuations—some years may yield exceptional gains, while others can be marked by substantial losses. This volatility is often characterized by noise and discomfort, making it crucial to maintain a long-term perspective.

Understanding Long-Term Returns

The average return becomes apparent only after an extended period. For instance, the Nifty50 has shown a 25-year CAGR of 12.86% from 2001 to 2025, while the Nifty50 TRI boasts an impressive 14.43% CAGR in the same timeframe.

Key Takeaways for Indian Investors

For Indian investors, the key takeaway is that equity rewards patience rather than prediction. Expecting fixed deposit-like certainty from equity could lead to premature withdrawals at inopportune times. Embrace the journey and let time work in your favor!

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Disclaimer

Past performance is not indicative of future returns.

This post is for educational purposes only and not investment advice.