INVESTOR EDUCATION

Wealthcity ‘s overview:

Historically, shares have outperformed most of the financial instruments and have given the maximum returns in the long run. For instance, given below are the average annual returns for the U.K., since 1900, provided by Credit Suisse First Boston. These figures are adjusted for inflation, also known as the real return.

The numbers may look small but you need to consider the power of compounding. It’s a virtuous circle, or snowball effect, meaning that even a real rate of ‘just’ 5% can produce a large sum, given enough time. It also means that apparently small differences can have a significant impact on the final amount.

On similar terms, the returns from the Indian equity market have also been very handsome. Ethical Wealth institutions that are scouting for investment opportunities beyond the Arabian Gulf can look towards the Indian stock market, with confidence.

Shariah conscious domestic investors can also find Indian stock market a better place to invest. They will be able to invest in a relatively comprehensive number of stocks consisting of various sectors including IT, drugs and pharmaceuticals, automobile to core sectors like energy, cement, steel and mining etc. In fact, the availability and quality of Shariah complaint stocks in India is much better than in many Islamic countries.

Slowly, but surely the world’s economic centre is shifting away from the established, wealthy economies such as Europe, Japan, and North America to the emerging economies like China, India, and South East Asia.

China and India, in particular, are projected to become the two largest economies of the world in the next fifty years. China, riding high on its manufacturing ability, has recorded tremendous economic growth in the recent past. But, as far as the foreign investors are concerned, it is still looked at with suspicion, mainly because of its political setup and the economic model. On the other hand India, the world’s largest democracy, offers some very clear advantages.

India is one of the fastest-growing economies in the world. A population of 1.3+ billion supplies a formidable human capital resulting in cost efficiencies for conducting businesses and thereby, making India a powerhouse of investment opportunities.

India’s institutional framework is well suited for the world economy. Corporate India has been performing well and this factor, coupled with strong macroeconomic fundamentals, growing industrial and service sectors, provides great potential for investment in the Indian economy.

Its legal framework which protects foreign investments is one of the best in the region. The economy offers abundant technical and managerial talent, with international experience. India has a demographic advantage coupled with an ever growing working age population. The huge capital inflows into the country mirror the confidence of foreign investors in the Indian economy’s ability to match this expectation.

India as compared to many other developing countries has been a star performer in recent years, both in terms of returns and attracting funds from overseas. Favorable demographics, wide opening of the economy and global competitiveness have put India on the economic radar of the global players.

Leading indicators and available information both suggest that the Indian economy is poised to build upon the gains in macroeconomic performance secured in the recent past. Robust strengthening of manufacturing activity, high corporate profitability, buoyant equity markets, robust merchandise exports and imports and service sector activity all point to a brightening of prospects for the Indian economy in the future.