The Asset Most of Us Have Never Heard Of

In Northeast India, many of us - I’d even say the majority of us, are not aware that our money can grow over the long term. It can grow through financial products like stocks and equity. But the main things we know about are real estate, buying plots of land, and maybe gold.

In other parts of India, gold is a very important asset, and it matters here in the Northeast too. But besides buying land and investing in real estate, bank fixed deposits are mostly all we know. Some more informed people know about mutual funds, but there aren’t many — and even fewer who know in depth where that money actually goes. And a mutual fund is itself a product used to invest indirectly in the equity segment.

So mostly we know bank fixed deposits, real estate, and maybe gold. I’m not saying those aren’t assets — they are. They’re just the traditional ones. Most of us haven’t really heard of equity or the stock market. On this part, we are kind of illiterate.

So what exactly is equity?

Equity, or stock, is basically ownership. When you invest in a stock, you buy a share of a company — which means you own a part of it. You own a slice of the company. The slice will be small, of course. As a retail investor, unless you are mega rich, you won’t be able to own a large portion of a company. But whatever the size of your slice, your return is proportional to how the company grows.

Roughly the compounded annual growth of India’s 50 largest stocks by market capitalisation — call it about 12-14% on average.

And in the long run, equity is the best instrument to beat inflation. It is also one of the most important assets that help ordinary individuals like us build wealth.

Three ways to look at the stock market

There are many ways to view the stock market. One is as a wealth-creation machine for the long term. The capital market itself is designed for long-term investment. You can speculate in the short term, but you have to understand that speculation carries high risk.

Some people also view the stock market as a great marketplace — a business. If you are really good at trading or speculation, if you are good with risk management and can handle higher volatility better than the average investor, then you can use the stock market as a way to make income. You can treat it as a business.

And some people take it up as a professional career. They are mostly embedded in the system — they work in asset management, in wealth management, and some are market makers who provide liquidity to big institutions. These are high-paying careers.

You don’t need a finance degree

Now, I’m guessing that most of you reading this are not from a finance background. You can switch careers, of course. But in order to make a living from the stock market — or to create wealth over the long term — an academic degree in finance is not mandatory. If you have one, it can complement your journey, and that’s great. But it’s important to note that it is not compulsory. There are many successful traders and investors who did not come from a financial background — including myself.

Inflation is quietly eating your money

As I said, most of us haven’t heard much about the stock market, but it is one of the best assets out there if you want to beat inflation over the long term and create wealth. And speaking of inflation — in India it runs at about 6 to 6.5% on average.

This is where the time value of money comes in. It is better to receive money now than to receive it in the future. We have to understand these concepts. Because inflation keeps rising, we need to find a way to hedge against inflation risk. We don’t want our money to erode and lose its buying power.

So where should the money go?

To hedge inflation, we need to find high-return assets. The best ones, as I said, are equity. Gold has also been booming lately, though it has had its quiet periods too. Historically, gold usually returns around 8 to 10% CAGR. So even with gold doing well, the best-paying asset over the long run is still equity.

Where the Indian market stands right now

Since 2024, the Indian market has been on hold. We had a great bull run in late 2022 and the start of 2023. That bull run ran for many months, and then around October 2024 the market started correcting. Right now we still haven’t crossed our all-time high, especially in the larger-cap stocks.

But judging from past performance, the equity market will grow — because if the Indian economy is really growing, the Indian stock market will grow with it. There is a strong correlation between the Indian economy and the stock market. If the economy thrives, it means the private sector is thriving. And if the private sector is thriving, companies earn more and their sales grow. If sales grow, their profit before tax grows too. And if profits grow, companies pay higher taxes — taxes that are used to develop the country.

That is a simple way of seeing how the overall Indian economy and the stock market relate. This is why people say the stock market is a very important indicator of a country’s economic condition.

We’ve been missing out — let’s change that

Northeast Indians have been missing out on the equity side, the stock market. Nobody taught us; we’ve had to figure it out on our own. That’s the whole message of this note.

We have to invest — because of inflation, and because we need to create wealth. Without wealth, we can’t secure our future. And if we build wealth, we get better living: a better day-to-day life, and financial security.

It doesn’t matter what you do right now. You could be a student, you could be running your own business, you could be working odd jobs, or you could be a government employee. Whatever field you come from, one thing is certain: you need to secure your future. The only way to do that is to act now. Start looking for ways to grow your equity, and secure the next 10 years.

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