# 1. Your money needs to generate much higher returns to secure your retirement

Are you burning your retirement cash to light up your life today?

We don't want to spoil your party. But connect the dots of your ages, your 30s/ 40s or 50s and they WILL connect to 60,70 and even 80. You will turn old one day. And you will not want to depend on someone then, even your kids. The good news is that you can start today and build sizeable savings by -50% the time you retire.

Assuming annual compounding at the same rate as the investment rate throughout the period of investment.

The chart shows how saving at a more than average rate of 20% can make your savings increase substantially over the next 20 years. By how much? A 1 lakh savings today can increase to close to Rs. 40 lakhs by the time you are ready to hang up your boots.

The trick is not to be satisfied with the 5% or 10% returns and hunt for investments that can give you above average returns. Your search ends here.

# 2. Equity markets can give the returns needed to secure your future.

The graph below shows that returns generated by the Sensex over the past 20 year period have been a healthy 15%. This while the Indian economy grew at 3-4% for more than half that 150% period. Going forward, this growth is targeted to be 6-8%, now you know why we are optimistic about the equity markets.

BSE Sensex Point to Point returns as on 25.05.05
Source: Bloomberg

If you have been wary of investing in equity mutual funds because of the risk involved, we have some news for you…

# 3. Historical data proves that investing inthe Equity market becomes less risky in the long term

As shown below, the peaks and troughs of returns can be mellowed by remaining invested for the long term. The historical analysis shows how the maximum and minimum returns generated by the Sensex behave from 1 year to 20 years.

BSE Sensex Rolling returns (yearly basis) from March 1979 to March 2005
Source: Bloomberg

But you may be a complete beginner and may know nothing about how to invest. Fortunately, there are collections of investors called Mutual funds that have professional fund managers that invest in the stock market collectively on behalf of investors.

And what's more,

# 4. Mutual funds offer a better route to investing in equities for lay investors

A mutual fund acts like a professional fund manager,investing your money and passing the returns to you. All it deducts is a management fee and its expenses, which are declared in its offer document.

As seen in the following graph, looking at the past 10 years,mutual funds have given higher returns over the BSE Sensex ,even when measured on a 5 year rolling basis.

5 years rolling returns (daily basis) for last 10 years

*Average returns of private sector diversified equity fund ( 7 schemes) existing more than ten years. Source Crisil Fund Tracker. Comparison of returns of BSE Sensex and Private Sector Diversified Equity funds (7schemes existing for more than 10 years) for the past 10 years. Source: Crisil Mutual Fund Tracker, Bloomberg

The logic is simple, it makes sense to leave your investments in the hand of professionals you can trust.

However, you may ask, why invest now. Because…

# 5. The Indian economy is booming right now.

The Indian economy is growing strongly as shown by the growth rate of Gross Domestic Product (Broadly the Total Production of goods and services in the country). A booming markets.

BSE Sensex from 1985 to 2005 till date.
Source: Bloomberg

Investing now in the stock market can enable you to benefit from a growing Indian economy.