Where to Invest Money? The averages Indian always look forward to get an answer of this question. An Immediate answer of this question is Stock Market. Stock market investment is considered as Best Investment Option in India. Sensex is generating enormous wealth for the investors and expected to generate the same in future. As per an estimate, the average CAGR return of the Sensex in the last 30 years is 17%. The value of Sensex has grown to 100 times in last 30 years.The story of Wipro, Infosys and Titan Mega-wealth creator of the stock market is known to everyone.
Stock Market for Wealth Generation
- If you have invested in Wipro IPO in the year 1980 you would have got 10 shares by the investment of 1000 Rs. After 10 bonus issues and 2 stock splits, you would be holding 960,000 shares of Wipro today. The value of these stocks would be Rs 55.20 Crore (excluding dividend).
- Infosys is another example if you have invested in Infosys IPO in the year 1993 you would have got 100 shares by an investment of 9500 Rs. After 6 bonus issues and 1 stock split, you would be holding 25,600 shares of Infosys today. The value of these stocks would be Rs 3 Crore (excluding dividend).
- Titan stock is another mega wealth, creator. You must have heard the story of Stock Guru Rakesh Jhunjhunwala. He has made an investment of 40 Cr by purchasing 8 Cr stock of Titan with an average price of 5 Rs in 2002. Current Valuation of these stock is 1800 Cr.
Looking at above you must be agreed that Stock Market is best invest option for wealth generation provided you select multi-bagger stock and stay invested for a long time.
Do we have any other Best Investment option which generates more return compare to Stock Market answer is YES! Investment in Startup can give you better return compare to stock market.
Startup for Wealth Generation
A Startup is a small company that is just started. Startup companies usually offer new product or service that is not available in the market. Startup Company often looks for a way of raising money.
Raising money through IPO is the painful exercise for any Startup company today. Companies need to maintain a high level of compliance and had to undergo strict scrutiny before listing. Startup companies always prefer the route of Venture Capital or Private Equity over listing.
Why Startup is lucrative option for investment?
- Innovation: –Majority of Startup Company serves innovation. They offer new product and explore niche market. Continuous innovation is the Key mantra of these startup companies. Very few listed company of India work towards innovation except pharma companies. Companies like Maruti, Tata is working on the fuel efficiency of the car but not thinking about innovation like working towards electric car like Tesla.
Upside Potential and Returns:- Startup companies are like rising sun with huge upside potential. Business leaders and investor are backing startup with the personal investment you might have heard that Ratan Tata has invested in 10 startup companies so far.
- Ratan Tata Invested 5 Cr in e-commerce company Snapdeal via private equity in Aug 2014. Snapdeal was valued at $1 billon when Ratan Tata invested. The current valuation of Snapdeal is $5 billon.
- Ratan Tata Invested in Urban Ladder in Nov 2014. Valuation of the company was very low. This valuation is raised to $200 million in March 2015 when the company raised funding for the second time.
- Another example is Flipkart. You must have heard the story of 400 employees becoming crorepati by opting ESOP option in Flipkart.
- Portfolio Diversification:-Investment in Startup offers advantage of portfolio diversification.
The risk-return ratio in startup investment is very high. You should evaluate Startup carefully before making an investment.
At the end, I would like to say that if you are looking for risk-free returns invest in fixed deposit and bonds. If you are looking for high return long term investment options equity or early stage startup is for you.