Capitalmind
Capitalmind
Actionable insights on equities, fixed-income, macros and personal finance Start 14-Days Free Trial
Actionable investing insights Get Free Trial
Charts & Analysis

Nifty Adjusted For Inflation Returns Just 2.6%

I had earlier provided a chart of the Nifty since 2000, adjusted for inflation, including dividends and without.

A cleaner way to look at the index is to “adjust down” for inflation every month (using a monthly index). I have assumed about 9.5% for November and 9% for December (we only have WPI monthly data till October).

image

We are effectively at the lowest levels since April 2009. (If you recall,the index shot up 15% in May after the elections).

More importantly, look at the dead zone between May 1994 to May 2004 – net of inflation, you earned nothing (in fact inflation adjusted returns were negative till October 2004).

Worse: In the 17 year period that the Nifty has existed, the return, net of inflation, is 55%. The long term return of the Nifty, net of inflation, is 2.6%.

Those retirement plans that assume 15% equity returns need some rethinking.

Like our content? Join Capitalmind Premium.

  • Equity, fixed income, macro and personal finance research
  • Model equity and fixed-income portfolios
  • Exclusive apps, tutorials, and member community
Subscribe Now Or start with a free-trial