Why LIC is better ?
Trying to Answer you my view..
Nifty 500 index represents the top 500 companies based on full market capitalization and covers 87% of the total market capitalization of companies listed on NSE.
I considered data for the index between 2nd January 1995 and 30th June 2020, this consists of 6652 trading days. Between these days the index has surged by 771.8% and returned 6.04% on an average every year (CAGR).
On 18th May 2009, just as the global financial crisis was ending, the index closed up 459 points, gaining 16.2% in a single day! This has been the largest single day gain for the index.
On 23rd March 2020, on the first day of Covid related lock-down, the index closed down by 917 points, losing 12.81%. This is the biggest single day loss for the index.
Let’s test this theory for a limited number of days – say 100 days.
Nifty 500 has traded for 6651 days between Jan 1995 and 30th June 2020 and returned a compounded annual growth rate (CAGR) of 6.04%.
If we were to somehow not be invested in the market during the worst 100 days of returns, the returns of the index since 1995 would be 22.46% compounded annually.
On the other hand if we were to not be invested during the best 100 days of returns, an investor will end up with just ₹8.4 for every ₹100 invested in Nifty 500 in 1995.
If we were to be able to avoid both the best and the worst 100 days the returns would improve from CAGR 6.04% to CAGR 8%.
|Invested on all 6,651 trading days||Not invested on the best 100 days||Not invested on the worst 100 days||Not invested in the best or worst 100 days|
|Difference (from being invested on all days)||–||-12.52%||16.43%||1.96%|
LIC – LIFE INSURANCE CORPORATION OF INDIA
How ever if you investing in LIC, You will same Rate of interest along with other benefits. Might be you are not agree with this concept but this is reality of Investor investment and his/her returns.
In LIC you will get lot of other benefits
Offers Risk Cover,
Assured Returns/Income Benefits
Life Stage Planning
along with TAX FREE Returns under IT Act- 8010(10)D
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