As we say goodbye to the year 2022 and welcome the new year 2023, a study on the performance of the benchmark indices on the Bombay Stock Exchange over the last two decades has revealed that BSE Sensex has given a compounded annual growth rate(CAGR) of 13.23%, the BSE Midcap index has given a CAGR of 18.16% and BSE small cap index has given us a CAGR of 19.40% over the same period of two decades. Details of year-wise gain/loss are given below
- BSE Sensex has given positive returns during 18 years out of the last 22 years (81.82%) with a CAGR of 13.23%
- BSE Mid Cap index has given positive returns during 15 years out of the last 20 years (75%) with a CAGR of 18.16%
- BSE Small Cap index has given positive returns during 14 years out of the last 20 years (70%) with a CAGR of 19.40%
1. Equity has been the best-performing asset class among all the asset classes over the last two decades despite many market crashes en route. It has given compounded annual growth rate (CAGR) of 13.23% to 19.40% thus giving real returns in the range of 6.23% to 12.40% assuming 7% of annual inflation.
2. It is essential to have allocation towards equity in each of the investment portfolios based on the risk profile and the financial goals intended to be achieved in the given time frame
3. Most of us find it difficult to generate good returns from direct investments in equity on a consistent basis. Investment in equity through mutual funds may be a better option.
4. If we find it difficult to manage ourselves, no harm in taking professional help
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Wishing you all a very Happy, Healthy & Prosperous New Year 2023