How to Earn 70 Lakhs in 2 Years Through the Stock Market: A Feasibility and Strategy Guide
The stock market is a complex and dynamic financial arena where the potential for substantial profits exists. This article delves into the key factors that influence earnings in 2 years, as well as the strategies and risks involved. By expanding your understanding of the market and making informed decisions, you can increase your chances of achieving significant financial gains.
Factors Influencing Earnings in the Stock Market
Investing in the stock market involves several key factors that influence earnings. The amount of money you are prepared to invest, the companies or sectors you choose to invest in, market movements driven by macroeconomic and geopolitical factors, your risk appetite, and your commitment to understanding the market dynamics all play crucial roles.
1. Investment Amount
One of the fundamental factors is the amount of money you are prepared to invest. For instance, if you invest ?1 crore (approximately $133,000 USD) at a 35% annual return, you can achieve your target within 2 years. This is a significant capital to start with, and it requires careful planning and execution.
2. Selection of Companies/Sectors
Choosing the right companies or sectors is another critical aspect. Case studies, such as that of Vedanta Limited, demonstrate how a well-chosen investment can yield impressive results. In 2016, Vedanta’s share price was around ?65–70. By the end of 2017, it had risen to ?140. If you had invested ?20 lakhs (approximately $26,660 USD) at ?70 per share, you would have earned ?65 lakhs (approximately $85,500 USD) in 1.5 years.
3. Market Movements
Market movements are driven by macroeconomic and geopolitical factors. These external forces can significantly impact stock prices. For instance, global economic indicators, political stability, and regulatory changes can all affect market performance.
4. Risk Appetite
Your risk appetite is also a significant factor. Not all companies or mutual funds offer the same risk-reward ratio. High potential returns often come with higher risks. Best stock market investors often spend their entire lives honing their skills to identify good investment opportunities.
5. Commitment to Understanding the Market
The final factor is your commitment to understanding the stock market dynamics. This involves staying updated with market trends, analyzing financial reports, and continuously improving your investment skills. Successful investors often spend considerable time and effort in educating themselves to make informed decisions.
Is It Feasible to Earn 70 Lakhs in 2 Years?
While it is possible to earn substantial returns in 2 years, it is important to recognize that the stock market is not a surefire way to make money. Many people have made fortunes, but numerous others have lost their investments. The success rate is often quoted as 90% failure and 10% success, with the probability of failure increasing in the near future.
The Case of Vedanta Limited
A case study of Vedanta Limited demonstrates that substantial gains are possible. In 2016, Vedanta’s share price was around ?65–70, and by mid-2017, it had risen to ?140. An investment of ?20 lakhs at ?70 per share would have resulted in ?65 lakhs in 1.5 years. This example shows that with the right investment and timing, significant returns can be achieved.
Risk and Patience
While achieving a 35% return on a ?1 crore investment over 2 years translates to a CAGR of around 30.5%, it is crucial to recognize that this is well above the average return of successful investors like Warren Buffett. To achieve such returns, you must be willing to take on significant risk and have the patience to wait for the right opportunities.
It is rare for investors to accurately predict such substantial increases in share prices. However, by staying informed, diversifying your portfolio, and analyzing market trends, you can improve your chances of achieving your financial goals.
Conclusion
In summary, while earning 70 lakhs in 2 years through the stock market is feasible, it requires a significant investment, strategic selection, and a willingness to take on risk. By educating yourself and staying committed to understanding the market, you can increase your chances of achieving your financial objectives. However, it is essential to be prepared for the potential risks and be patient in your investment approach.