What your bank FD,KVP do in 8 years

If you had invested in a bank fixed deposit (FD) or Kisan Vikas Patra (KVP) three years ago, you would not have been even halfway through towards your goal of doubling that investment over eight to nine years. 

But had you invested the same money in the top 100 stocks, it would have already doubled by now. Here's how: 

On June 10, 2013, it would have cost you Rs 80,541 to buy one unit each of the Nifty100 stocks. Today, that amount would have become Rs 1.63 lakh, growing at a compounded annual growth rate of 26.43 per cent. 

"We are all familiar with the phrase, 'Do not put all your eggs in one basket'. That way, a diversified portfolio could have resulted in higher returns. One can't eliminate risks completely, but manage the risk level,". 

The return offered by the 100 stocks is higher than most fund managers managed to generate with their multicap funds during the same period. 

While sectors from banking, IT to consumer goods carry more than half of Nifty100's weightage, strong performance by some stocks priced in four digits did the trick for the Nifty100 portfolio. 

For example, Eicher MotorsBSE 0.06 %, which quoted at Rs 3,600 on June 10, 2013, has surged 5.2 times to Rs 18,800 by now. Bajaj FinanceBSE -1.16 % has surged 5.1 times over the past three years. The stock now trades at about Rs 7,700 against Rs 1,500 three years ago. 

"Some growth stocks such as Eicher Motors have performed well because of their niche businesses with dominance play. So they come with higher valuations,"

The return offered by the Nifty100 stocks was higher than a 12.88 per cent CAGR (or 43 per cent return) growth clocked by the NSE100 index during the same period. It even beat the 14.41 per cent CAGR (or 47 per cent) registered by NSE100's equal weight index during the same period. 

But had you invested the same money in the top 100 stocks, it would have already doubled by now. Here's how: 

On June 10, 2013, it would have cost you Rs 80,541 to buy one unit each of the Nifty100 stocks. Today, that amount would have become Rs 1.63 lakh, growing at a compounded annual growth rate of 26.43 per cent. 

"We are all familiar with the phrase, 'Do not put all your eggs in one basket'. That way, a diversified portfolio could have resulted in higher returns. One can't eliminate risks completely, but manage the risk level,". 

The return offered by the 100 stocks is higher than most fund managers managed to generate with their multicap funds during the same period. 

While sectors from banking, IT to consumer goods carry more than half of Nifty100's weightage, strong performance by some stocks priced in four digits did the trick for the Nifty100 portfolio. 

For example, Eicher MotorsBSE 0.06 %, which quoted at Rs 3,600 on June 10, 2013, has surged 5.2 times to Rs 18,800 by now. Bajaj FinanceBSE -1.16 % has surged 5.1 times over the past three years. The stock now trades at about Rs 7,700 against Rs 1,500 three years ago. 

"Some growth stocks such as Eicher Motors have performed well because of their niche businesses with dominance play. So they come with higher valuations,"

The return offered by the Nifty100 stocks was higher than a 12.88 per cent CAGR (or 43 per cent return) growth clocked by the NSE100 index during the same period. It even beat the 14.41 per cent CAGR (or 47 per cent) registered by NSE100's equal weight index during the same period. 

Diversification reduces stock-specific risks and gives better risk-adjusted return. 

BritanniaBSE -1.01 % Industries, Shree CementBSE 0.39 % and Bajaj FinservBSE -1.43 % are some of the other high-value stocks whose prices have surged 3-4 times over the past three years. 

 The market usually looks for companies with visible earnings growth. "As soon as they are discovered, investors start chasing them until their valuations become expensive. One should remember that many a times, investors get trapped chasing higher valuations,  "The stocks look expensive on the valuations front, "But the right way is to look at valuations vis-a-vis their growth profile, quality of franchise, earnings visibility and sustainability of margins. Hence, if one looks at these stocks on the parameters mentioned, I believe these are good investments with a long-term horizon." 

 If you had invested in a bank fixed deposit (FD) or Kisan Vikas Patra (KVP) three years ago, you would not have been even halfway through towards your goal of doubling that investment over eight to nine years. 

Diversification reduces stock-specific risks and gives better risk-adjusted return. 

BritanniaBSE -1.01 % Industries, Shree CementBSE 0.39 % and Bajaj FinservBSE -1.43 % are some of the other high-value stocks whose prices have surged 3-4 times over the past three years. 

 The market usually looks for companies with visible earnings growth. "As soon as they are discovered, investors start chasing them until their valuations become expensive. One should remember that many a times, investors get trapped chasing higher valuations,  "The stocks look expensive on the valuations front, "But the right way is to look at valuations vis-a-vis their growth profile, quality of franchise, earnings visibility and sustainability of margins. Hence, if one looks at these stocks on the parameters mentioned, I believe these are good investments with a long-term horizon."