12 December 2010

What We Mean By Long-Term investments/Power Of Compounding?

We have been mentioning many a times in our post 'Long-term investments' and enjoy the fruits of 'power of Compounding' many people who is new to stock market asking us what it is!!
The people who is there in the stock market and already doing intraday trading also were asking us,Is it achievable?.
Because they are very much conditioned to their intraday trade and aim to make out a small profit(like Rs.500/1000) within a day and they feel it is very safe.But the fact here we found is, they are the one who waste their money in brokerage or stoploss hit.Slowely,slowely their capital will erode after some time. Hence, each and every buy/sell one may do, they pay heavy brokerage(+Tax's) and their broker really makes money out of it ; No matter you loose or gain,the broker will get their brokerage and become rich.
In my experience, i have seen many intelligent traders, who knew all about stocks lost so much.I have never seen one person who made 'Massive Wealth' by just doing intra/short-term trading. So, the wisdom that one can learn here is "Be A Long-Term Investor" and create wealth for yourself.

Long-term invetsments:-

Buying a particular stock and holding it beyond 6-months 'To' many more years is what i meant by LONG-TERM INVESTMENT.
One need not to look out the market prices every now and then, that fall&rise.But it is important to understand the company business growth on the coming years.When the company yield profits year by year the share price will go up.(See The Stock selection page) Also the investors can have additional gain like - Stock spilit,Bonus and Dividend.

Here, i would like to give you one example, that will make you to understand better what is long term investements? and, How one can become rich by investing a 'Small Money & Harvest A Big Yield ' ?.

The Company Name is 'Hero Honda'
it is a public limited company, listed both in NSE&BSE exchanges.

In the year 2000 the stock price was around Rs.146/-
Assume that, if a middle class person plan for his/her son(or)daughter future education needs,would have bought this stocks with the small investment they could afford . This would have served that purpose very well.

if, one would have invested Rs.14600/- in Hero Honda stock in the year 2000. Now the current asset value gone to the un-imaginable hight.How much? Any guess?

The answer is - 11,42,500/- (Eleven Lakhs Fourty Two Thousand Five Hundred Only)

The Fact Sheet- 'Hero Honda' Stock

2000 -approx. price Rs.146.00 Face vale-Rs.10/-
Qty:-100 shares bought at Rs.146/-.
Total Investment Rs.14600/- (100XRs.146=Rs.14600.00)

2001-approx. price Rs.174.00 /-
STOCKS SPILTED:- 1:5 Ratio i.e.-Face Value becomes Rs.2/-
So,here the stock Qty becomes 500 from 100.

2002 -approx. price Rs.375.00 X 500 =Rs.1,87,500/-
Dividend yield 600%,i.e.- Rs.6000/-

2003 -approx. price Rs.275.00 X 500 = Rs.1,37,500/-
Dividend yield 900%,i.e.-Rs.9000/-

2004 -approx. price Rs.459.00 X 500 = Rs.2,29.500/-
Dividend yield 1000%,i.e. Rs.10,000/-

2005 -approx. price Rs.744.00 X 500 = Rs.3,72,000/-
Dividend yield 1000%,i.e. Rs.10,000/-

2006 -approx. price Rs.760.00 X 500 =Rs.3,80,000/-
Dividend yield 1000%, i.e. Rs.10,000/-

2007 -approx. price Rs.744.00 X 500 = Rs.3,72,000/-
Dividend yield 850%, i.e. Rs.8,500/-

2008 -approx. price Rs.810.00 X 500 = Rs.4,05,000/-
Dividend yield 950%, i.e. Rs.9000/-

2009 -approx. price Rs.1640.00 X 500 = Rs.8,20,000/-
Dividend yield 1000%,i.e. Rs.10,000/-

2010 -approx. price Rs.2060.00 X 500 = Rs.10,30,000/- NOW
Dividend yield 5500%.This year the company paid 2-times Dividend 4000%+1500%.
i.e. Rs.50,000/-Net.

Now to compute all these above dividend's +
Current market value comes to = Rs.11,42,500.00/-
  • What does it means...Your Rs.14,600 = Rs.11,42,500 (in 10 years).
  • The percentage of investment growth is 7825%.


Can any one of you tell me this kind of investment appreciation in any avenue of investments ?. Please let me know.


This above one is just an 'one example'. There are many scrips available like above Ex- L&T,Wippro etc shown a growth of 10000% and more.

Do think, just a while,
before you make any kind of investments decision.

Hope, you all understand now the term "Long-term Investments and Power of compounding".
" The stock market is a serious long-term business,
not a make-money-overnight casino."

We are here to do serious 'investment reserch' and provide you every month '1-stock' like this above.Where you can invest and stay cool.This investment will make you to create massive wealth. You can plan a small investment that you can afford every month for the next 3-years, may give you true financial freedom within another 5-10 years time frame.its no day dream; A scientific approach to investment.Our wealth coach can guide you/give you a better plan as per the individual needs.
One can plan the future 'Events' like-
Child future needs - Marriage/Education or Health
Achiving your dreams - Building a house/ Buying property/ Luxury car,Estates etc.
Explore Life-You can plan a trip to any where in the world as you desire to visit and stay over there.
You can also plan for your own retirement by doing systematic investment from now on.Just get in touch with our wealth coach when you are prepared for an investments for your future.