From the life history of great investors like Warren Buffet, Benjamin Grahm, Peter Lynch or our own Rakesh Junjunwala, one thing is quite obvious. All these great investors focussed on building wealth for the long term. Their focus was to give consistent returns to the investors year after year. When fact says that Warren Buffets historical CAGR is around 22%, it seems to be low. But we need to carefully understand two factors here.

One is the power of compounding Ė i.e. when you start generating returns then those returns also act as a capital base for your investment, which in turn is amazing. Second factor is the consistency and patience. Lot of people run behind stocks which has some rumours attached to them. For example there might be a rumour that XYZ company is going to make an investment of 1500 crore. So few investors stick to these stocks believing that if such a thing really happens they can double or triple their stock value overnight. But this strategy doesnít work quite well because most of them may be false news which might be spread by parties who want to push a particular stock. If you have closely observed all these rumours they will only be on companies which arenít doing so well! So it is important that you invest in fundamentally strong stocks and hold onto it for a long time.

The benefit of investing in companies which are fundamentally strong, is that you have seen the company performing in the past and whenever any new opportunities comes up in a particular sectors, only the highly performing companies will be able to seize those opportunities quickly and build upon it.