Thread by @Gajendra9653

Hi, I have been meaning to write on this subject for some time and a tweet from @aditya_kondawar just did the trick, so here it goes.
This thread is for people who are looking to create wealth in the long run by investing, and by long run I mean 15 + years.

So, if you are looking for a quick fix, get rich quick scheme this probably is not for you.

Of the people, I have come across with regards to the stock market who wanted to create wealth in the long run, the most common apprehension was RISK, everyone wanted an assurance of some sorts as most had seen someone or other burn their hands in stocks.

Second, most people assumed they needed a big amount, to begin with.
Third, everyone wanted to identify the next HDFC or Asian paints. If not then what was the point?
Last, you needed to earn at least 20-25% plus return every year to create a sizable corpus.

Having heard this multiple times I set out to find a solution, a journey that has been rewarding both personally and hopefully financially.
So to make you understand, let’s assume a couple with a monthly income of 50K.

Ideally, they need to save 5K for their nest generation and 5K for their retirement, the rest 40K they are free to spend as they choose.

By saving this amount every month they may be able to save in access of 1.5Cr in 20 years, provided they are able to grow their investment 12% compounded. Now, this is where people lose interest, really 20 years. But, no one said it’s going to be easy.

If you are still reading this let me give you good news for you to make this money in the stock market your choice of company needs to grow at just 6% over and above inflation.

Let’s see how, assuming you invested in a company with a market capitalization of 10,000cr and since we a hoping for a compounded growth of 12%, so at the end of 20 years the company needs to be worth 80,000cr.

Now let’s understand inflation. Your 100 Rs today will have a purchasing power of only 29rs in 20 years at 6%. To maintain its 100rs worth of buying power you need to grow it to 345rs in next 20 years.

If not then although a 100rs note from 2000 may occupy the same space in your wallet, its purchasing power has diminished to just 29rs.

Now let’s look at what it does to the company you are investing in. If the companies market cap in 2020 is 10,000cr and the company stays put. Although in the year 2040 the book value of the company will still be 10,000cr but in reality it will be worth 2900cr only.

If the company just beats inflation then it needs to be worth 34,500cr. Now, from this base of 35,000cr if it manages to double that’s nearly 90% of your target achieved.

So you see if you have a structured and well-thought plan it can help you achieve that financial freedom that most only dream of.

More good news there is this thing called dividend and that does some serious wonder for you.

I assume you will have more queries so feel free to DM me.