From Rs 1 cr to Rs 2200 cr: What makes a roller coaster ride possible for Raamdeo Agrawal?

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August 05, 2021 8:57 PM

The first and foremost important thing before starting equity investments is to understand that these are long-term investments and never to invest emergency money needed at short notice.

equity, equity investment, long-term investment, market volatility, power of equity, short-term fluctuations, investment journey of Raamdeo AgrawalTo stay invested for the long term, investors need to have patience and conviction on the power of equity to withstand the short-term market volatility.

Equities or stocks are said to be a great wealth creator. However, investing in them is not everybody’s cup of tea and many investors lose their money due to wrong decisions of entering high markets and then moving out at a loss during market corrections.

The first and foremost important thing before starting equity investments is to understand that these are long-term investments and never to invest emergency money needed at short notice.

To stay invested for the long term, investors need to have patience and conviction on the power of equity to withstand the short-term market volatility.

To overlook the short-term fluctuations, investors need to have a long-term vision. The long-term financial goals may be set by proper financial planning.

Motilal Oswal Financial Services co-founder Raamdeo Agrawal’s 31-year investment journey would guide general investors how to make wealth through equity investments.

Agrawal started his investment journey with Rs 1 crore in 1990. At the time of the Harshad Mehta-led market rally in 1992, the value of his investment increased to Rs 30 crore.

However, once the bubble burst, the value of investment reduced to Rs 10 crore from Rs 30 crore in correction after the 1992 market rally.

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The value of his investments increased 10 times from Rs 10 crore to Rs 100 crore in the Y2K market rally of 2000.

The correction after the Y2K rally saw 70 per cent erosion in the value of his investment and it plummets to Rs 30 crore from Rs 100 crore.

However, within seven years, the value of his investment soared by as much as 833 per cent – from Rs 30 crore to Rs 550 crore during the 2007 market rally.

The market meltdown after the 2007 rally resulted in a steep fall in the value of Agrawal’s investments as Rs 550 crore reduced to Rs 250 crore in 2008.

His patience paid a rich dividend as the value of Agrawal’s investments increased from Rs 250 crore to Rs 1,850 crore by February 2020.

As the markets crashed briefly during the onset of Covid-19 pandemic, the value of investments reduced from Rs 1,850 crore to Rs 1,150 crore in 2020.

With the ease of Covid concerns, the value of Agrawal’s investments has now increased to over Rs 2,200 crore in the current market rally.

As a humble investor, Agrawal, however, doesn’t give any credit to himself for the remarkable investment journey that generated a CAGR of 28.18 per cent in 31 years, but just attributes it to the luck factor.

To support this, he narrated the incident involving his investments in ING Vysya Bank. He purchased the Ing Vysya shares for a value of over Rs 300 per share. But he panicked as the share price dropped below Rs 100 within three years and decided to sell the shares of ING Vysya Bank. However, the original share certificates got lost in transit as he couriered the certificates along with the redemption form. When the duplicate certificates were issued after much paperwork and delay, the share price of ING Vysya Bank bounced back to over Rs 300 per share.

Attributing it to sheer luck that he avoided incurring losses due to loss of the share certificates, Agrawal however advises that there is no alternative of staying invested to generate wealth through equity investments.

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