Given a choice where you invest your money? Which one is best stock market investment option as per you? Well, an answer to this question varies based on person to person. Let’s try to do one small exercise. Take a quick break of two-minute and answer one simple question. Which one is best investment option as per you? Your answer could be –
- Fixed deposit
- Mutual Funds
- Real Estate
- Stock Market
Well, if your answer is fixed deposit, mutual funds or real estate your answer is wrong. As per me, Stock market is one of the best investment option.
Let me prove my argument with some examples and statistical analysis. After going through this post, you will also agree that stock market is one of the best investment option. So, here are real life example that proves that stock market is best investment option to grow your money.
Best Investment Option – Stock Market
Example – Maruti Suzuki Car Vs Maruti Suzuki Shares
Owning a car is considered a necessity today. A car is owned by even a middle-class family today. The first name that comes to our mind while buying a car in India is Maruti Suzuki. Maruti Suzuki is the most trusted brand in the Indian automobile industry. A car of Maruti is popular for its efficiency, features, quick service, and economic price.
Among all models of Maruti Suzuki, Maruti 800 was one of the most popular cars sold by Maruti. Maruti 800 car is reached to end of life now. The price of the Maruti 800 was approximately 2 Lakh. If someone has purchased Maruti 800 car in 2003, he would have paid 2 Lakh. After 14 years of usage, the car must have become either junk or unusable. No one will be ready to purchase it.
However, on the other side instead of buying a Maruti 800 Car, if you would have purchased a stock of Maruti Suzuki, you would have become Crorepati.
Let’s try to understand this by doing a simple mathematical calculation.
- The price of a single share of Maruti during IPO in the year 2003 was Rs.125.
- If you would have invested 2 Lakh in 2003, you would have got 1600 shares of Maruti.
- In April 2022, a share of Maruti has touched Rs.7920.
Total Value of Stock on April 2022 = 1600 x 7920 = 1.26 Cr
Note – Above calculation does not include any dividend amount paid by the company during 19 years.
So, you would have become crorepati if you have deferred your decision of buying a car and invested in the stock of Maruti Suzuki.
Example – Fixed Deposit in Bank Vs Stock investment of the same bank
Let’s take one hypothetical example. Two friends Ravi and Raj wanted to invest Rs. 5 Lakh for the long term in the year 2004. Two options were given to them for the investment.
- Option -1 – Invest Money in Fixed Deposit of Yes Bank.
- Option -2 – Invest Money in Stock of Yes Bank.
Ravi was a conservative investor he selected fixed deposit as an investment option. On the other end, Raj was a smart investor and he opted for HDFC Bank stock.
Ravi got a 7.25% return from the fixed deposits. On the other hand, Raj got a CAGR return of 61% from the HDFC Bank stock.
The stock price of HDFC Bank in March 2009 was Rs. 40 so Raj got 12500 shares of HDFC Bank. Raj sold these stocks at the price of Rs. 1500 in Oct,2021. Raj Invested Rs. 5 Lac and in return, he got 1.87 Cr in 17 years, whereas Ravi Invested Rs.5 Lac and got Rs 8.88 Lac in return.
- 5 Lac HDFC Bank Fixed Deposit in 2004 @ 7.25%
- Value Got = 8.88 Lac
- 12500 Shares of HDFC Bank in 2004 = 5 Lac
- Value Got = 1.87 Cr
Example – Royal Enfield Bullet or Eicher Motors Shares
Suppose before 10 years you needed a vehicle and you purchased Royal Enfield Bullet of Eicher Motors worth Rs. 1.35 Lac. On the other hand, your friend was also in need of a vehicle but he decided to postpone his requirement. He invested his money Rs. 1.35 Lac in Eicher Motors shares. The stock price of Eicher Motors was Rs.216 in the year 2009. He got 625 stocks in his portfolio.
He sold Eicher Motors stock @ Rs. 32000 in 2017 and got 2 Cr in his kitty.
- Cost of Royal Enfield Bullet (Eicher Motors) in 2009 = 1.35 Lac
- Current market value = 1 Lakh (Approximate)
- 625 Shares of Eicher Motors in 2009 = 1.35 Lac
- Market value Got = 2 Cr
I hope with above examples are enough to convince you that the stock market is one of the best investment options and it gives a very good return over the long run.