I was talking to my mother about our family flat in Pune. My elders bought it in 1978 for about ₹1 lakh. Four decades later it was worth somewhere around ₹1 crore.
A hundred times your money. Every Indian family has a version of this story — the plot bought in the seventies, the flat nobody wanted, the land near the highway. And it is always told as a multiple, never as a rate.
So I worked out the rate. A hundredfold increase over roughly forty years is about 12% a year, give or take. A good outcome. But it is a very different sentence from "a hundred times your money", and the gap between those two sentences is what this post is about.
The comparison that started it
Around the same time, in April 2019, a newspaper ran a piece marking a milestone for the Sensex. The index was formally launched in 1986, but its series is calculated backwards from a base value of 100 in 1979 — so 2019 was its fortieth year.
Everything that follows is history as it stood in 2019. These are not current figures and I am not updating them, because the argument does not depend on where any index is today.
By April 2019 the index stood near 39,000. Going from 100 to about 39,000 over forty years is roughly 16% a year. Including dividends paid along the way, the same series would have been near 56,000, closer to 17% a year.
One caveat: the flat was bought in 1978 and the index series starts in 1979, so the two windows are a year apart. Treat all of these as rounded approximations, not measurements.
The mistake I nearly made
My first reaction was to look at 12% against 17% and think: five percentage points. That is not much.
That reaction is wrong, and it is wrong in a way that matters more than almost anything else in this subject.
Here is the same forty years as arithmetic — an illustration using those past, dated rates. It is not a forecast, nothing was ever available at a fixed rate, and no rate like this is promised to anybody.
- ₹1 lakh growing at about 12% a year for forty years ends up near ₹1 crore.
- ₹1 lakh growing at about 17% a year for the same forty years ends up near ₹5.6 crore.
Five percentage points a year is not a small difference. Over forty years it is the difference between one crore and more than five and a half — not a rounding error at the edge of the result, but roughly five times the result.
This is what compounding does, and it is why almost everybody underestimates it. We compare rates by subtracting them, because that is how our heads work. Money compares them by multiplying, year after year, so the gap widens every single year instead of staying the same size. A difference that looks trivial over one year is the dominant fact over forty.
So why are we patient with one and not the other?
Nobody checks the price of their flat every morning. No app tells you the property is down 2% today. You do not get a quote at all unless you go looking, and even then it is a range rather than a number.
Because the price is invisible, the holding period stretches out on its own. Forty years pass, nobody panics, and at the end you have a story about how patient your family was.
Shares and funds are priced continuously and pushed in front of you. The same forty years, lived with a live price, contains hundreds of moments where selling feels sensible. The asset did not become more volatile. Your view of it did.
Put plainly: a lot of what we call patience with property is really just the absence of a screen.
What I take from this
Not "property is bad" — a house you live in does several jobs at once, only one of them financial, and this arithmetic ignores rent, maintenance, stamp duty, taxes and the fact that you cannot sell one room to pay a bill.
Two narrower things. First, the rate matters more than the multiple. If you only ever hear returns as "a hundred times", you will misjudge which of your assets did the work.
Second, Indian households have long kept much of their savings in property and fixed deposits, and it is worth asking honestly whether that is a considered decision or simply the one that felt calmest. The uncomfortable possibility is that the calm came from not being shown the price, rather than from anything about the asset. That question is yours to answer — this post is not going to answer it for you.
This article is general information for education only. It is not investment advice and does not take account of your circumstances. Investments in securities are subject to market risks; please read all related documents carefully before investing.
