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D.Muthukrishnan (Muthu), Certified Financial Planner- Personal Financial Advisor

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Letting go 21,080 crores

Posted by Muthu on June 10, 2015

“When experienced investors frown on gambling with price fluctuations in the stock market it is not because they don’t like money but both experience and history have convinced them that enduring fortunes are not built that way.”- Thomas Phelps

I always tell you not to look at 3 or 5 years but preferably 20 years. In the medium term, you may make decent profits. Whereas in the long run you would be able to build a fortune. Let us be long term greedy; to build an enduring fortune over next 20 years.

I was going through a tweet from Motilal Oswal AMC. An institutional investor, Natwest markets bought shares of HDFC Bank in 1995 for Rs.40 crores. Few years down the line, in 1999, they sold the same for Rs.400 crores. Money multiplied by 10 times in 5 years. Natwest might have patted themselves on their back for such a wise decision. It’s a rarity to make 10X money in 5 years.

Instead of selling the same in 1999, had Natwest kept those shares, the value of the same early this year (27th January 2015) is Rs.21,480 crores. Money multiplied by 537 times over 20 years. Had Natwest been long term greedy, they would be sitting on billions of dollars today. Think about how many hundreds of crore they would get every year as dividend. One year dividend may cover their 1999 selling price.

India has an enormous potential and future. We’re growing from a low base and hence would grow at a high rate. If you stay invested in quality stocks or good equity funds for next 20 years, enduring fortune is all yours.

Disclosure: I’m a shareholder of HDFC Bank.

8 Responses to “Letting go 21,080 crores”

  1. Muthuji, Excellent as expected. Well said “Let us be long term greedy; to build an enduring fortune over next 20 years”. Equity is best for long term investments.

  2. Nishanth Muralidhar said

    Long term greed, patience and willingness to delay gratification . So hard yet so necessary

  3. excellant post muthu sir ,
    Hdfc bank , wipro , infy only a dozen few companies where it multiply or it happen
    with All good companies .. say if i buy a Large cap fund Axis Long term or birla 96
    How much 1 lac can become after 20 years ??

  4. Muthu

    There are times when one mutual fund would perform exceedingly well but 9 others will give mediocre performance.

    Can we also have a refernce of the mediocre performance funds in your future posts ( just a passing reference)

    Eg. If you do SIP of Rs. XXX for 20 years you would get Rs. XXX assuming returns @ 18%

    however even if the fund underperforms you would get Rs. XXX assuming returns @ xx%

    The above will help the investor to understand what is the best and worst returns that can be expected from his investment


    • Muthu said

      What is being mentioned is the aggregate performance of an equity mutual fund portfolio. It would include best performers, average performers and under performers.

  5. Noushad said

    If I invest monthly 25k continues 12 year how much I get after 12 year.sir give me your reply.

  6. Rajaram said

    Good one, having the wisdom to cut out the noise over an extended period of time is so important here…

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