As at January 8, 2009, the BSE-SENSEX had closed at 9071 (it is at a lower level - 8984, on January 21, 2009 - 1221hrs), a far cry from 20873 on January 8, 2008.
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Now, even if it takes 5 years (January 2014), for SENSEX to reach its previous high, the return would be 18.14% (CAGR).
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If it takes 7 years (January 2016), it would be 12.64%.
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And even if the SENSEX reached that figure in 10 years (January 2019), the returns would be 8.69%.
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The surprise is that even for a 15 years time frame (January 2024), the SENSEX generates a CAGR of 5.71%.
Not bad at all when you consider that the 10 year Government Security yields 5.65% (as on January 21, 2009 - 1221hrs.) and that the long term capital gains tax on equities is NIL.
So its better to invest in insurance policies right now, specially those policies, which yield interest on compounded basis under market risks, keeping the above 10years plan in mind. Yes, we are talking bout, Unit Linked Insurance Plans (ULIPs).
If market is suffering from the inflation, that doesn't mean you should leap one-on-one for those mis-sold traditional policies, say for example, Jeevan Astha or something like Recurring Policies. To invest in the victim market is the best policy, and the for that purpose, ULIP is the best policy. Hope, you trust, atleast the above bulleted figures!!!
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