Can you make Rs. 1 Crore tax free profit from stock market ?

Stock market investing for long term can give you huge profit through identifying and investing in stocks with good growth potential. Identifying  stocks with good growth potential and holding them ignoring short term fluctuations is the key to making huge wealth creation from stock market.There are four important parts to generate such huge returns through investment:

-Identifying a suitable company;

-Buying the stock at the right price;

-Holding the stock until the potential of the company is more than fully captured in its price;

-Booking profit when the stock reach our target.

What is long term investing ?

Buying a portfolio of good stocks and holding them for 5 to 10 years can be considered as long term investing.As per Income Tax Act if you hold a stock beyond one year its will be classified as long term investment for the purpose of income tax calculation.The most important advantage of long term investment is that  the profit generated from  long term investment  is tax free meaning you need not pay any tax on the profit.

Let us consider an example of  Rs.20 lakhs invested in a portfolio of 10 stocks ( Rs.2 Lakhs each in a stock) in the year of 2007 :

Stocks-that-perform-well-in-10-years

You can see Rs. 20 Lakhs invested in 2007 generated wealth of more than Rs. 1.80 Crores.

Advantages of Long term investing:

  • It takes emotions out of equations. A long term investor is not worried if the market or stocks crash 10% in short term or do not rush to book profit when the stock moves up 10%.
  • The data show that Long term investor almost always be right. If you allow your winners to ride ,there is a good chance that, over the long run, you are going to see your portfolio to grow in value, especially if you focus on high quality businesses.
  • Compounding works to your advantage.Buying stocks for the long term allows you to take advantage of compounding, or the ability to reinvest your profits (e.g., dividends) over time to generate even greater profit potential.
  • It’s really easy for anyone to do.One of the greatest aspects of long-term investing is that anyone can do it.If you have an expert to support you to select the portfolio stocks to invest then you can just forget about the investment or just keep on adding more of the same stocks and it can be done by even a lay man.
  • You will sleep well. Being a long-term investor will allow you to sleep better at night.There is no need to look at the market at the opening or closing on a daily basis. You can even look at the change in portfolio on week end holidays.
  • You will pay less in taxes.As profit from investment above one year will be taxed at 0% a long term trader saves a lot of money compared to traders or short term investors.
  • Your investment risk drops. Staying invested reduces your risk of missing out on big opportunities.Trying to time the market may not work always in your favor resulting in huge missed opportunities.
AAA Crorepati Portfolio: A portfolio of 10 stocks to create tax free profit  of Rs.1 Crore for next 10 years. Click Here To Signup.
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