Wealth Creators – Episode 1 – TCS
For some reason, The last blog we did striked a chord with some of our readers and we were quite surprised to note that people called us to just to inform that – “the blog was good and relate-able”, “the advice given was good”, “that we were able to communicate our ideas so well”, some of the encouragements we got. We were happy to hear that and the week passed by. We woke up to this weekend not that happy because we did not have a solid topic in our mind to write to about.
But As investors our lives are mundane and repetitive. We checked this unhappy thought out of our mind and stuck to our mundane-repetitive time table. That is to wake up, get cleansed up and read the Newspaper. The first page had a ad about a popular retailer opening a 6 floor showroom exclusively for furniture. I made a mental note to talk to my Investor friend about listed companies having interests in Furniture. The thought was how good the margins and demand will be if a retailer opens up a exclusive showroom for Furniture!!
Then i saw the next piece. The bulb glowed bright. A big smile on my face –
This is what i saw –
When we started writing these blogs we always wanted to bring to our readers list of companies that are so common and familiar to us and have also been wonderful wealth creators. Well, this is the 1st of them –
A tech behemoth and a wealth creator
- Started in 1968
- Software Services division started in 1980
- Got Listed in 2004 (Available for public investing)
- In 2011, Became the largest Company by market Cap overtaking Reliance Industries Limited.
- TCS has 68 subsidiaries with offices in 46 Countries
- TCS has employee base of 3,49,998 (nearly 1,10,000 of them Women)
I am sure not even the employees of TCS would have invested in shares of TCS but would have got bought gold, Real estate, Insurances to “Invest” their savings! from the salaries they got from TCS (so funny seriously, ha ha)
If you would have noticed closer, This picture says that every 1 lac invested would have been 13 lacs today, meaning your money grew @ 20% compounding.
ONE = THIRTEEN point something!
If you remember, We told here that at a compounding of only 15%, We would make crores with meager investments of thousands every month, Imagine what a additional 5% would mean? Those of you thinking that you would have gotten 25% extra, You need to understand the magic of Compounding better.
A meager difference of 5% in compounding would result in gain or loss of almost 28 lacs (depending what you did 😉 ).
Friends, In the short span of time since we started, we have met around 60 people and are quite happy to know that most of them have healthy savings rate however unfortunately the asset class chosen for investment are inefficient. The point we want to drive home is that – over long periods of time, Equities are one of the best asset classes to invest in.
As aptly pointed out by most of you, Equities are not everyone’s cup of tea. Most of us might not even know the difference between a listed and unlisted company.
This is where Mutual Funds come into play.
From the point of view of ordinary investors, I regard these (mutual funds) as probably the single most important investment innovation in the history of capitalism. These have given the less-wealthy the power, in a way that nothing else has, to somewhat level the playing field that capitalism tends to bend in favour of the wealthy.
Some of the advantage of Mutual Funds –
- Professional Management (@ very cheap cost)
- Liquidity (meaning you can convert your holdings in to cash within 2 days)
- Diversification – A ideal MF holds around 30 stocks in its portfolio thus reducing the risk of being invested in only one company.
- Only asset class to provide inflation beating returns in the long run.
Wisdom is nothing but thoughts in words, Words in action! You know what we mean? 😉