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Make Big Money with Small Savings in Equities not Real Estate

May 31, 2010

Big Players always make the big money in any business they venture. Now the question arises how do small players create big wealth ? Courtesy РIndian Equities. Data suggests that a a 10 year SIP in Mutual Funds has yielded around 30% returns. So your [1000 / month saving]  120,000 has grown to about 600,000 in 10 years. Now if you switch them to Dividend option, you can easily get at least Rs 30,000 [worst case] as dividend income every year. Reported Dividend income is about 60,000.

Now compare this to investment in real estate. First, for a paltry sum of Rs 1,000 / month  you had no investment opportunity. On top of it you have the headache of managing the property atleast few times a year, corporation taxes, dealing with shady people and the endless list goes on.

Indian Equity Fund Yield Vs Real Estate Returns

  • SIP of Rs 10,000 / Month for 10 years would make you worthy of Rs 60,00,000 – Same amount invested in property would be valued at Rs 60,00,000 [We are giving realty bulls the benefit of doubt. Assuming they invested in Land.] Ok, now if you have had bought an apartment for 12,00,000 the value would be lesser than Rs 60 Lakh.
  • Yearly Yield on Equity Investment from 11th Year – Rs 4,00,000 Lakh [conservatively] Reported dividend pay-out Rs 6,00,000
  • Yearly Yield on your property [Nil, since investment is in Land or Rs 25,000 Max if it is an apartment, still less than the conservative dividend you earn from Equity]

The facts are in front of you. And since you are our reader, we believe that you are disciplined enough to create big wealth in the next 10-15 years by sticking to Equity Mutual Funds. Read our next post on Why Lumpsum Investments in Equity Funds Now and how to Make your money grow 10 times in 12-15 years.

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