Normally, when it comes to investing people want 100% returns. That is, everyone wants to double their investment — no matter what.
Perhaps that explains the reason why people jump into penny stocks. Because they think that it will be easier for a Rs. 4 stock to double to Rs. 8 and then to Rs. 16 and so on. And it’s not just in stocks. People enter real estate as well with the idea of doubling their investment.
But do you know that only a handful of stocks offered 30% returns over the past 15-20 years? I randomly checked the CAGR of some multibaggers on my watchlist and I realized that only a very few of them offered 30% CAGR in the past 18 years.
Some of them are Eicher Motors, Titan Company, Page Industries, Lupin, Sun Pharma, etc. All those multibagger stocks like MRF, Maruti, HDFC Bank, Infosys, TCS, Britannia, Hero Motocorp, ITC, L&T, Reliance Industries, etc. offered less than 20-25% over the past 18 years.
So I would say 100% CAGR for 15-20 years is not just practical but it’s IMPOSSIBLE. You know why? Because a $10,000 investment growing at 100% p.a. for over 30 years could list you on Forbes Billionaires List.
$10,000 investment compounding at 46% CAGR for 40 years gives you $40 bn:
$10,000 investment compounding at 50% CAGR for 40 years gives you $120 bn:
One biggest mistake that I did when I started investing in stock market is that I never tracked my CAGR. Of course I have my own reasons too for that. Like, I was not salaried and and my investments and withdrawals were random, etc. So if you are a stock market investor then you should have an investment goal.
Video / Malayalam
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Happy Investing/Trading! 🙂