Which is the Most Consistently Growing Asset Class: Equity Shares Direct Investing

Good morning all, and welcome to this discussion on the most consistently growing asset class. Today, I will share my personal journey and experience with equity shares and direct investing, which has proven to be a lucrative alternative to traditional mutual fund investments.

A Personal Experience with Equity Shares

Unlike many who mention qualifications or courses, my experience is drawn from personal wealth management instincts, my own money, and the business ventures I have nurtured. I started my business in 1987, and by 2009, it had expanded across 14 verticals. Despite this business success, I faced a major challenge with my mutual fund investments. They did not meet the expected returns, leading me to seek an alternative approach.

Switching from Mutual Funds to Direct Investing

Starting in 2010, when I was fully engaged in my business, I began investing in mutual funds with a small, steady monthly sum of Rs.1.50 lakh. I was given the advice to wait for 5 to 7 years to see the annual returns. However, when I reviewed my mutual fund investments in April 2018, I realized that over 8 years, my investment had grown to Rs.15.12 million from an initial Rs.14.4 million. This outcome, backed by detailed documents, was a stark contrast to the low returns promised by the financial advisors.

Stop Monthly SIP Payments and Diversification

Since I had been making monthly savings contributions, I stopped these payments in April 2018. As there was a 1-year lock-in period, I began to explore direct investment strategies. After evaluating the various brokerage costs, I found a rational demat firm. By the time the fiscal year 2020-21 was in full swing, my initial investment of Rs.1 crore had grown to Rs.9 crores by February 14th, 2020.

Timing and Market Opportunities

Just as stimulus measures were being announced by Finance Minister Nirmala Sitharaman, and shares were deeply discounted, I made my purchases. Beginning in late February 2020 at the 52-week lows, I continued my purchases until early April, taking advantage of the market volatility. By April 30th, 2020, I had successfully recovered my Rs.9 crore investment, proving the wisdom of direct equity investments in volatile market conditions.

Conclusion and Key Takeaways

My personal experience clearly indicates that equity shares and direct investing can offer a more consistently growing asset class compared to mutual funds. The key benefits include:

Higher returns on investment over the long-term Flexibility in hedging against market fluctuationsDirect control over investment choices and timing

In conclusion, while mutual funds have a place in diversified investment portfolios, for those seeking higher potential returns and the ability to strategically time their investments, equity shares and direct investing are compelling options. It is essential to conduct thorough research, carefully choose reputable brokers, and consult with financial advisors to tailor your investment strategy to align with your long-term financial goals.