When you buy a share of a company you become a shareholder in that
company. Shares are also known as Equities. Equities have the potential to increase in value over time. It also provides your portfolio with the growth necessary to reach your long term investment goals. Research studies have proved that the equities have outperformed most other forms of investments in the long term. This may be illustrated with the help of following examples:
Over a 15 year period between 1990 to 2005, Nifty has given an annualised return of 17%.
Mr. Rajan invests in Nifty on January 1, 2000 (index value 1592.90). The Nifty value as of end December 2005 was 2836.55. Holding this investment over this period Jan 2000 to Dec 2005 he gets a return of
78.07%. Investment in shares of ONGC Ltd for the same period gave a return of 465.86%, SBI 301.17% and Reliance 281.42%.
Therefore,
§ Equities are considered the most challenging and the rewarding,
when compared to other investment options.
§Research studies have proved that investme nts in some shares with a longer tenure of investment have yielded far superior returns than any other investment.
However, this does not mean all equity investments would guarantee similarhigh returns. Equities are high risk investments. One needs to study them carefully before investing.
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