How Compounding works!!

Bringing home a point via numbers is NOT a very effective technique and a lot of valuable information is leaked in the cracks of boredom. A gap is formed between what you wanted to say and what the audience actually got!!!

When you say the same thing by building some sort of narrative, or a story, it is better received. We have been guilty of bringing forward our performance numbers in same boring way!!, so I thought let me explore the other side.

The year is 2017 and its the start of the new fiscal year (April 1). 02 friends Gajodhar and Bakshi start off their journey of investments with a sum of Rs 35 lakhs each.

While Bakshi simply outsourced his requirement to MysticWealth Momentum and concentrated on his own business. Gajodhar decided to try his hand at the market himself, “How difficult can this be, he thought, after-all he has done well in business over the years”.

Today is 19th Dec, 2020. Its been little over 03 years since the time they started. Mr Bakshi is sitting with an amount of 77 lakhs, 88 thousand. (23% cagr) despite the covid and its crash.

• *Our personal returns are higher as we indulge in Equity curve based position sizing), outside the scope of this blog**

As if this figure is not decent enough, Mr Bakshi had pledged his holdings and was smart enough to also subscribe to Mysticwealth Options membership which earned him around 12% per year on his portfolio. (Could have been double with some leverage, but Mr Bakshi is very conservative)

Remember, next 03 year compounding will happen on the amount of 77 lakhs. We shall update this blog in 2023.

There is a day light Gap between MWM and Mr Bakshi’s other options. Around 6000 basis points to be in ballpark. (This graph does not include Options returns)

Here is a comparison,

this is a old slide, We are at 122% and not 108.

What about Gajodhar

We don’t know the stats of Gajodhar. That is a metaphor if you did not pick on it yet.

You, the reader is the Gajodhar. You know the answer how well you did. You don’t have to answer me, your friends, or even your spouse (actually u have to answer your spouse, I am sorry).

If you did better than these numbers, good for you and carry on, you are already in top 5% of your league and on your way. However if you did not, please DON’T Lie to yourself. There is No fun living in denial. Healing process be it any addiction starts with Acceptance.

If you are interested in joining the MysticWealth Family, Please read this blog detailing the difference between our 02 offerings. MWM website and smallcase.

Cheers