A recent report by Motilal Oswal reveals that Indian equities have significantly outperformed US markets over the past 35 years, with investments in the Indian stock market growing by nearly 95 times since 1990. The report compares the performance of Indian and US equities, highlighting India’s superior returns over a more extended period.
According to the report, a ₹100 investment in Indian stocks in 1990 would have grown to ₹9,500 by November 2024. In contrast, the same amount invested in US stocks would have increased to ₹8,400, demonstrating a higher return from Indian equities.
Equities vs Other Asset Classes
The report also compares equities with other investment options, such as gold and cash. Gold, which is often regarded as a safe-haven asset, delivered a return of 32 times during the same period. A ₹100 investment in gold in 1990 would now be worth ₹3,200—substantially lower than the growth seen in equities.
Cash, on the other hand, emerged as the worst-performing asset. The ₹100 held in cash over 34 years, with minimal interest, would have grown to only ₹1,100, underscoring the importance of investing in assets that offer higher growth potential.
The Importance of Patience in Investing
While long-term investments have historically yielded higher returns, the report also cautions that many investors struggle with the emotional side of investing, especially during market downturns. As the report points out, long-term gains are often eroded by short-term panic and impulsive decisions when markets are volatile.
“The key ingredient to healthy investment portfolios is to have a long-term vision,” stated the domestic brokerage. It emphasized the need for patience and the ability to withstand market turbulence, which is essential for realizing the full potential of investments.
Tax Implications and Long-Term Investment Outlook
From a taxation perspective, the report notes that a holding period of one year is considered long-term for equities and two years for debt instruments. However, it stresses that one year can be too short to weather the market’s volatility, making patience even more crucial for investors aiming for long-term growth.
The report serves as a reminder that maintaining a steady and long-term investment strategy can help investors navigate market fluctuations and achieve superior returns over time.
