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| Why Equities? |
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| BSE Sensex |
| 18799.66 |
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| Change in Points |
| 132.95 |
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| % Change |
| 0.71 |
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| After a decade of liberalization and rationalization of policies, India
continues to witness rapid expansion in economic activity. The GDP
growth rate has crossed 8 per cent and the Prime Minister has
pegged a target of 10 per cent for the next couple of years. How many
countries can boast of such GDP growth rates? One effect of free
market policies has been lower single digit returns in traditional
savings instruments like bank deposits on the one hand, and larger
opportunities in equity market, on the other. Investors are being hard
-pressed to earn superior real returns to match their aspirations as
traditional savings plans are barely beating the inflation rate, leave
alone beating the real rate of inflation. A prudent financial plan in the
backdrop of free markets and high growth environment merits
investment in equities to the extent of 10 to 40% of savings depending
on an individual’s risk profile. |
| Currently an average Indian invests only 2% of savings in equities.
Going forward, virtues of equities should not be ignored by investors,
especially in view of the fact that equities as an asset class offers
superior returns in a fast growing economy. |
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