Staying debt free is stress free for individuals and companies. Is it true for your investments too? The answer is yes.

One of the easy ways to avoid bad investments is to stay away from debt. To validate the point, we compared average SIP returns of listed debt free companies on NSE vs returns of Nifty50 benchmark index. Our coverage universe includes data of 87 companies for 10 years and 125 companies for 5 years.

Results (as of Oct 2018)

10 Years 5 Years
Number of companies 87 125
Average Returns 18% 15%
Nifty 10% 8%

Thus, an index created of all debt free companies would have easily beaten the benchmark index by a handsome margin of around 7% annually for the last 5-10 years. Simple rules followed for a long time can be quite rewarding.