Stock market is not T-20, but a Test match; investors must try to score triple century: Nilesh Shah

Stock market investment does not appear to be easy. A good chunk of population stays away from equity investment under the belief that the capital would somehow vanish into thin air if they did. However, it is a big misconception. Time and again market participants have explained the safest way of investing and warned against placing risky bets. The most common advice among all is to stay invested in the market for the long-term thereby riding over the short-term volatility. Understandably, those looking to make a quick buck will only be disappointed, and that too at a huge cost.
 
Nilesh Shah, MD, Kotak Mahindra AMC explains this eloquently with a cricket analogy. "Investors should not play T-20, but get into Test match mode. Do not predict all-time high because hitting a six here and there won't amount to much. Investors should rather try to score double and triple centuries," he said.
 
"Markets will keep rallying in the long-run. 11 years ago, Sensex quoted at the value where Nifty is moving today. In the next 11 years, Nifty will reach the figure Sensex is quoting now," he explained.
 
The Nifty index was ruling at 5000, 10 years ago in 2008. It is now hovering around 10,800 and hit a lifetime of Rs 11171.55 on January 29, 2018. In absolute terms, the Nifty has grown over 100 per cent, doubling investor wealth, in the last two years. Include, compound interest and dividends, and the figure will go even higher.

Clearly, stock market holds a huge potential to make money for investors to retire rich. 
 
Now that the road has been revealed, where exactly should investors put in their money for the long run? The easiest way to have a exposure in stock market is via Nifty index fund. It is the simplest and most cost-effective way to take a dip into equities. Nifty index fund comprises the top 50 companies that drive the movement in benchmark Nifty index. Investing in these companies for long-term is not really risky. 

Financial Literacy Expert Varun Malhotra says that there are two types of risk in the stock market. One is volatility, and the other is the actual risk of losing money. "Investing in a particular company does involve risks, because it may or may not go out of business however, if one invests in a basket of fifty companies, the risk involved reduces to a great extent," he said.

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"If you are investing in a very passive way, which is if you are investing in the Gross Domestic Product (GDP) of the country, you're always safe. To explain, if India's GDP is $2.5 trillion, then out of this $2.5 trillion, about $1.25 to $1.5 trillion would belong to top fifty companies. These companies are what Sensex and Nifty are made of. Now, if you invest in these companies, you're always safe, because nothing is going to happen to GDP. As and when GDP increases, your invested money too will do so," explained Malhotra.