Can anyone please confirm the statements below. I have found this calculations and ROI of Equity in one of the post in JagoInvestor, and I didn’t see anyone rejecting the calculation part? Are we accepting the ROI calculations of Equity as mentioned below:.
1. Equity actual CAGR as on date has been only 12.5%. (Check Nifty levels since 2004).
2. MF companies deduct 2.25% AMC every year, so actual CAGR is only 10.25% for the customers.
3. If you deduct annual inflation of avg 7.5% per year, then NET RETURNS from Equity will be only 2.75%.
4. Equity CAGR is directly connected to GDP growth which was >6% in the past 10 years however with the current political scenario, GDP growth will remain <6% and so equity CAGR will be lesser, in the range of 9-10% which is VERY POOR considering the risks involved.
I am confused. Then why there is so much SIP hype ? Are MF houses making money through this Hype Cycle ?