Greetings from PenguWIN:
Last week, I received calls from a couple of investors concerned about the recent decline in the Indian stock market. Investors who have been with us since before the Covid market crash are understandably unnerved.
The Nifty closed today at 22,829, marking a 13% decline from its all-time high of 26,277. While I cannot predict market levels or forecast near-term returns, I am confident that achieving 12-14% returns over the next five years is realistic—barring another black swan event like Covid or a new war involving India. With GDP growth projected at 6-6.5% and inflation targeted by the RBI at 4-6%, the potential for 12% returns remains strong. In years of higher growth, returns could even touch 14-15%. However, investors expecting returns in the range of 16 to 20% may find themselves disappointed. It is essential to remember that returns will not be linear—there may be a couple of years with negative returns, offset by other years with strong gains.
Equity investing is undoubtedly a roller coaster ride, requiring patience and resilience. For those seeking a smoother journey, fixed-income investments such as bank, company, and postal deposits may be more suitable—though they often yield negative or near-zero returns when adjusted for taxes and inflation. As Mutual Fund investors, we benefit from professional money management and the discipline of systematic investing. It is crucial to stick to this approach, avoid checking portfolio values daily, and allow time to work its magic. The longer you stay invested, the higher the probability of achieving stable returns even if you begin investing at market peaks.