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POSTED BY ON January 5, 2011 10:25 pm ONE COMMENT
Is there any country in which the bank interest rates are more than the Equity Returns or was there any period in history before when it has happened like this before anywhere?
Is this condition not possible at all? Is there are related between interest rate and Equity Returns?
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@Prabeesh. Interest rate is something which u know when you invest and Equity return is something which you will know only when you book ur profit.
to put in simple words… Interest rate Vs Equity returns comparision would largely depend on the time line you want to consider.
1) if you consider the time line (1 year) where in the stock market is in a down trend not ur interest rate even ur saving account interest rate 3.5 would be more than the equity return (here ur capital would be erroded)
2) if u consider the time line where in the stock market is in uptrend.. depening on hte uptrend the stock return might be low/equal/even exceed the interest rate.