Secret Of Compounding In Stock Market with Live Example -12000% in just 19 years.....

What is compounding effect & how it works?

It is the ability of an asset or instrument to generate earnings, over a period of time in which reinvested earning generate an unbelievable result in long time.

In stock market ( dividend and earning of the company) reinvest in the same stock.

Let us talk on stock market compounding effect.....

Let us take example of any stock of Nifty 50 say Asian paints.....

I have invested 1 lakh rs. In Asian paint stock holding for a long period of time say for 19 years with respect to earn 15% p.a.

In Jan 2000 I bought shares of Asian paint 6000 @ 16.6 Rs. See how compounding played its role.

Compounding Calculation Formula.....

Lets see If money multiply at 15% p.a. what could be value in 19 years with compounding and at 25% what could be value......

Lets discuss compounding rate of 15% if stock grown up then investor can multiply money 12.3 times in 19 years.  while, Stock grow at 25% for 19 years Rs. 1,00,000 becomes 55.51 lakh it means money multiply 55.5 times in 19 years so, money triple every year. 

Studying Asian Paint Stock Following are the necessary information of company.....

Asian paint is leader company from paint business and one should invest with vision of 15-20% p.a. growth.

Few number of Asian paint reported in 2018

Revenue:    14559.95 Cr.

Net Profit : 1894.80 Cr.

Eps :            19.75

OPM% :      21.82%

Share holding of promoter is 52.79%

Market Cap of company is 1,37,381 Cr

Today Rate as on 16 March, 2019  is 1432.25 Rs.

Value after 19 years  is  Rs. 85,93,500

Initial Investment made Rs. 1,00,000

So, Money multiply by 86 times in 19 years. it mean My investment multiply 4.53 times every year.

Moreover, The company has paid Regular dividend from 2007 to till date.

So, 34 lakh Dividend company has paid so far. Almost 34 times of my investment. Total return from Asian paint from jan 2000 to march 2019 in 19 years Money reach to 1,20,17,100.

My money multiply 6.31 times each year.

Summery:

One can easily understand when time of horizon is long the multiplying of money becomes more and easy. Here, If we have reinvested dividend earning back to stock result might to very different and answer can be 1.5 Crore corpus by just investing 1 lakh.

Try to invest in blue chip stock for long time and just 15% p.a. can create a big wealth over a period of time. 

Start early investment as much we can. Work for money for 20 years and after 20 years money will work for you.

There are number of stock as on date available which will give 20% for coming 10-12 years easily. Try to buy leader of industry and story of stock must be consumption based story.

For article below link.....  

Read article here

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