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Deposits in Bank Fixed Deposit VS Investment in Same Bank Share

How Investment in Banking Stocks is better than the Deposit in Fixed Deposit in the same bank for Long term....

In the Year 2000 (12.02.2000) India top Bank S.B.I Bank F.D (Fixed deposit) rate of Interest is around 9 to 10 % per Year. 9% for 1 to 2 years and 10 % for Long term Fixed deposit of 10 years or above...

Suppose if anyone has Surplus of Rs 500000 and need his money after 15 to 20 years ...Then he has two option... Either go with simple way which is mostly done by General Public and deposit his money for 15 Years in Bank Fixed deposit Or Go with other way and Invest in Same Bank through Equity Share Investment...

For better Understanding Suppose Ram and Shyam are two Best friend. One day they both went to the Bank and wanted to invest his Rs 500000.

Ram took safe side and deposit His money in Bank Fixed Deposit @ 10 % per year for 16 years...

Shyam has some knowledge about Financial Market and Economy. After some research he came on conclusion that Indian growth is not possible without contribution of Banking Sector...

So Shyam decided to go with equity investment and he purchased S.B.I shares of Rs 500000 @ 24 per share (on 16 Feb 2000).Total 20833 shares of face value of 10...

After long time Ram and Shyam meet in Mumbai in his friend Ganesh’s daughter marriage...

Ram came first and waiting for his friend Shyam...

After few minutes Shyam came in his B.M.W car and open his gate. Ram asked “How have you become so rich have you won any lottery”

Shyam replied “No I didn’t won any lottery Do you remember one day we went to bank”

Ram replied yes. Then Shyam said you invested in bank Fixed Deposit and I purchased Shares of same Bank @ 24 and I got total 20833 Shares of S.B.I .Ram replied yes.

Shyam said…”Now these days I have 208330 shares of S.B.I (due to S.B.I split his face value from 10 to 1 so I got 10 times of my shares)and C.M.P of S.B.I share is around Rs 220 (as on 01.07.2016) ..So my portfolio value is around Rs 4.50 Crore (Rs 45832600).

In this time period I also earned couple of lakhs as dividends (around 73 LAKHS). And I purchased my Car from dividends.

{(2905 % from June 2000 to May 2014 when face value is 10) Rs 60.51 Lakhs as dividend (Rs 290.50*20833=6051986.50) + (610 % of Rs 1 that means Rs 6.10 per share *208330= Rs 1270813 between 2014 to till June 2016)}
Shyam asked and you have ....Ram told...Not much more ...it’s just around 26 Lakhs....not even equal to your last 4 years dividend amount...

This is the story of “Deposits in Bank Fixed Deposit VS Investment in Same Bank Share”.

If you are Intelligent Investor and ability to understand the business and its growth opportunity in long term …then you can make lots of money from this market.

Do Investing and Keep Smiling

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