Which is better?

Option 1: 20% ROI on Mutual funds?
Option 2: 10% Net profits?

People usually choose Option 1.

Is 20% ROI on Mutual Funds per year better than 10% Net profits per year in Business?

NOPE.

Unfortunately, it’s a misconception.

Let’s say you make ₹10 Cr per year in business with a Net Profit of 10%, which is 10 Lakhs per annum.

But in this business, if you can rotate cash every 60 days, which means you need an average of ~15L Lakhs of money invested in the business.

That’s ~ 66.6% return on money investments.

Let that sink in!

The faster your cash rotation, the lesser the amount of investment required - the higher the return on your money invested.

If, in the same above example if you were able to rotate cash every 30 days, the money investment required would have been ~ 7.5lakhs, and the Return on this investment would be ~133%

Hence in a business, even when the profit % looks small, it is doing way better in terms of returns than any guaranteed return scheme.

So don't get attracted by just seeing the ROI per year of Mutual Funds / Stock Market and stop growing your profits.

What are you doing to increase your profits substantially and reduce the time it takes to rotate money in your business?
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