Why Investing is Easy - Chapter#3

 Continuing with series of understanding Why Investing is Easy, We thought to bring our own example to the table. This is true story of a Share that we bought when we were just newbies. 

We bought a stock at INR 240 and It went to INR 2700. 

Thats a neat 11X gain. Meaning 1 lac invested is worth 11 lacs now and 10 lacs Invested is worth just a above one crore at 1.1 crore.. Fanstastic! One can see Investing is so "easy", you just have to buy a stock and wait for it to go up. Oh Wait! We just realised we did not tell you how long we waited to make 10 times money we invested. 

We bought a stock at INR 240 and It went to INR 2700 in 8 years

Now it makes more sense, we just need to buy a stock and wait for 8 years to make 10X. That works to a return of ~31% yearly compounded. So we said wow what if we can compound at this rate for another 2 years? We have anyways waited for 8 years.. 2 more years wont hurt! Magic.. 

In Just 2 more years, we will have 2 Crores! So we decide to wait..

In the next 2 years, the stock corrected significantly and was selling at 1/3rd price of its peak.

So 10 years later, the stock about multiplied 3.5 times which is still a very good return but nothing compared to the peak price or the fancy expecations that we carry when we start investing journey.

 

 

We bought a stock at 250 and It is trading at 898,10 years later.

The stock we are speaking about is Polyplex Corporation which we bought about 20 shares at 240/share circa 2014/15. And actually sold them at 300 during covid. Even after waiting for 6 years, we hardly made any money.. Thats one of the realities of investing. No one can predict when the Markets will reward/punish the good/bad performance of the company. The holy grail ain't known to nobody. 

We are in middle of a super bull market and there is a on-slaught of YT Shorts & Insta stories that are rather over simplfying equity investing selling dreams that even dreams would not dare to dream about. Hope this piece acts as a timely reminder to those extrapolating unnecessary things and losing focus on the bread-butter winner they have today. 

Investing is simple but never easy. One thing is, you can get a great stock idea but to make money out of it is another thing all together.. 

Stay tuned for Chapter#4.   

For any financial Planning queries, Please contact Droplet Wealth at invest@dropletwealth.com.