Gold Outshines Nifty 50 and Real Estate: A Long-Term Investment Winner

Gold has once again proven its worth as a top-performing asset class, outshining the Indian stock market index Nifty 50, real estate, and fixed income investments over various time periods. According to FundsIndia’s Wealth Conversations Report, long-term investing data highlights gold's superior performance.

Indian equities, measured by the Nifty 50 TRI, have delivered a compounded annualized return of 12.6% over 20 years, translating into a 10.7x multiplication of invested money. However, gold has emerged as the top performer, delivering a compounded annual return of 15.6% over the same period and multiplying investments by a remarkable 18.3 times.

Among other asset classes, US equities, represented by the S&P 500 TR (in INR terms), also performed well with a 15.1% CAGR over 20 years, multiplying money 16.6 times. In contrast, real estate and debt lagged behind, with real estate delivering 7.8% CAGR over 20 years, multiplying money 4.5 times, and debt generating 7.6% returns, growing investments by 4.3 times over the same period.

Over shorter periods, the performance trend continues. Over 15 years, equities returned 12.1%, while over 10 years, returns stood at 14.2%. These figures reinforce why equities remain a core component of long-term portfolios despite periodic volatility. Meanwhile, gold, even over 15 years, returned 14.4%, and over 10 years, it delivered a 19.7% CAGR. These numbers underscore gold’s dual role as both a hedge and a long-term wealth creator, especially during periods of economic uncertainty.

In the short term, the Nifty 50 witnessed 9%, 14.1%, and 14.5% returns over 1, 3, and 5 years, respectively. In contrast, gold returned 87.7%, 42.6%, and 27.4% over 1, 3, and 5 years, respectively. This significant outperformance highlights gold's resilience and potential for high returns.

Over the years, gold has quietly reasserted itself as a serious portfolio asset, not just a hedge for uncertain times. After rising steadily for over 18 months, the yellow metal is being supported by central bank buying, shifting interest-rate cycles, and a softer US dollar outlook, prompting investors to reassess its role in long-term portfolios.

Emkay Wealth Management believes the case for precious metals remains intact. “With central banks continuing to accumulate gold, interest rate cycles turning supportive, and silver benefiting from rising industrial demand, precious metals are increasingly being viewed as core portfolio assets rather than tactical hedges.” They also note that gold and silver have emerged from a decade-long consolidation phase and entered a structural bull market about a year ago, a phase that historically tends to last three to five years. Indian investors have benefited not just from rising global prices but also from rupee depreciation against the dollar.

Reinforcing the constructive view, Geojit Investments Limited noted, “Gold prices are expected to remain supported by sustained central bank purchasing and strong ETF inflows, even as geopolitical tensions ease and trade-related uncertainties diminish.” They added that policy uncertainty has added volatility, with speculation that Kevin Warsh could succeed Jerome Powell as the next Federal Reserve Chair introducing additional volatility as investors reassess the potential implications of a shift in U.S. monetary policy.

Overall, Emkay Wealth said gold remains well supported at current levels, with investors continuing to seek diversification, stability, and protection against macroeconomic and currency uncertainty. They recommend that portfolios with relatively high exposure, particularly where gold and silver together account for more than 25 to 30% of assets, should be reviewed with a professional advisor to assess profit booking while retaining strategic allocations.

New investors looking to enter after the sharp run-up are advised to adopt a disciplined approach. An allocation of around 5 to 10% of the overall portfolio may be more appropriate. Investments are best staggered over time to mitigate volatility, with options including physical gold, gold and silver ETFs, gold mutual funds, and precious metal-linked investment products.