Long term investing has always paid well for investors. To justify this fact, an analysis of yearly returns is presented. The following table containing historical returns of BSE Sensex between 1985 to 2008 confirms this fact. The data shows returns of BSE Sensex in the first and second half of respective year followed by full year returns.
Historical Year on Year returns of BSE Sensex between 1985 to 2008.
Based on the data compiled in the table above, Rs 100 invested in BSE Sensex in 1985 would be Rs 3,500 as on writing of this article (16% compounded returns). At the peak, Jan-08, your investment was worth Rs 5,300 (18.5% compounded returns).
Returns from individual stocks could be much higher,as compared with the Sensex returns. For a long term investor this would have been an excellent achievement. One wonders , anyone would have been able to achieve these returns in any other asset class !