Why is equity better than other assets over the long term?

Answer transcript: Equity means part ownership of a company and hence makes one entitled to the profit of the company. Stock price is a reflection of rising/falling stock prices. If the company is performing well, that means the sales and profit of the company is rising. Rising stock prices can be a reflection of inflation and if the company has pricing power, they will be able to increase their sales and, in turn, profit. On the other hand in fixed income instruments, it is seen the returns are not substantially higher than inflation.

This article was originally published on April 21, 2017.