Rs 9500 invested in 1994 is worth Rs 3.

5
crores now. Unbelievable, yet true!
Call us for a free booklet to learn more
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Certain things in life have to
be experienced to believe.
Consider this: Infosys
Technologies made their
IPO (Initial Public Offering)
in 1994. The share was
priced at Rs 95. All investors
who applied for shares
got allotment. Since going
public, this great company
has created enormous wealth
for investors. After fve
bonus issues and a stock
split, the original 100 shares
have grown to 12800 shares.
At the current market rate,
this is now worth around Rs
3.5 crores. If we include the
several lakhs that Infosys has
given as dividend to the share
holders, the amount will be
much bigger. It is interesting
to note that the same amount
of Rs 9500, if deposited in a
bank (fxed deposit) in 1994
would now be worth around
Rs.38000 only.
To cite another example:
Rs 10000 invested in
Geojit IPO in 1995 is today
worth Rs 12.4 lakhs and
the investor would have
received Rs 133450 ( more
than ten times the original
investment) as dividend, till
date. Investment in blue chip
stocks has created enormous
wealth for investors. Mutual
funds also have rewarded
investors handsomely. For
instance: an investor who
had invested Rs 1 lakh in
Birla Sunlife Tax Relief ’96
in March 1996 would have
received Rs 21.6 lakhs in tax
free dividends alone by June
2008!
This story of phenomenal
wealth creation might sound
unbelievable for a person
without any exposure to the
capital market. Therefore, it
is important that investors
should be introduced to the
capital market if they are
to participate in and reap
the benefts of this wealth
creation.
However, investors should
be guarded against risks
of investing in low grade
companies. An investment of
Rs 1.8 lakh in HFCL in 2000
is now worth only Rs 1200.
Direct investment in stocks
requires fnancial expertise,
time and inclination. Most
investors may not have that.
For them, indirect investment
through the mutual fund
route may be ideal.
Mutual funds, particularly
Equity Diversifed Funds
that invest predominantly in
stocks have given attractive
returns to investors. As on
30-07-2010, thirty one equity
diversifed mutual funds in
India have given an annual
average return of more than
22% during the last 5 years.
It is important to note that
these are tax free returns.
Unfortunately, the fact
that such fabulous returns
are available from smart
investments is not known
to the vast majority of those
who save and invest.
A safe method of investing
through the mutual fund
route is by choosing a
Systematic Investment Plan
(SIP). Systematic investment
plan, as the name implies, is
a disciplined and systematic
method of investing in
stocks. Here, the investor
invests a particular amount
(as low as Rs 1000) at regular
frequency, say, every month.
An ECS debit arrangement
with the investor’s bank will
make SIP very convenient.
The great merit of SIP is that
it absorbs the volatility in
stock prices. When market
declines investors get more
units thereby benefting
them in the long run. In the
context of the emerging India
growth story, SIP in equity
diversifed funds would be
a good investment idea. So,
SIP and grow rich!

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