Gold Outshines Stocks and Real Estate: A Long-Term Investment Champion

Gold has emerged as the best-performing asset class across various time frames, outperforming the Nifty 50, real estate, and debt over periods of 1, 3, 5, 10, and 20 years, according to FundsIndia’s Wealth Conversations Report.

Although gold lags behind foreign equities like the S&P 500 over a 15-year time frame, its strong bull run since 2022 has solidified its status as the top investment choice.

As of January 31, 2026, the Nifty 50 posted a CAGR of 12.6% over 20 years, as against 15.6% CAGR of the gold price in Indian Rupees over the same period. The returns over one year are best denoted by the compound annual growth rate or the CAGR.

A difference of 3% is huge over a longer period of investment. For example, Rs 1 lakh annual investment at 12.6% grows to Rs 87 lakh after 20 years, while at 15.6%, the final corpus balloons to Rs 1.27 crore.

Gold also beats foreign equities as the S&P 500 managed to generate 15.1% over the 20 years, ending January 31, 2026. Both real estate and debt posted less than double-digit returns over the last 20 years and have lagged gold returns over all periods. Real estate managed to deliver 7.8% while debt generated 7.6% for the investors over the last 20 years.

FundsIndia’s Wealth Conversations Report used NHB Residex (returns for the period Dec-02 to Dec-08 are considered for 5 cities and for 15 cities post Dec-08 till Sep-2025) for calculating Real Estate Returns. The real estate market in India is highly fragmented, with prices varying within cities; primary and secondary market deals; commercial to plots, etc. Hence, NHB Residex is the best possible standard to be used for determining returns.

Gold in the last 15 years, with a 14.4% CAGR, managed to beat Nifty 50’s 12.1% return, but S&P 500, with 19.4% CAGR, managed to outperform it. India – Equity (Nifty 50 TRI) has delivered returns of 9.0% over 1 year, 14.1% over 3 years, 14.5% over 5 years, 14.2% over 10 years, 12.1% over 15 years, and 12.6% over 20 years.

Gold (in INR) has delivered returns of 87.7% over 1 year, 42.6% over 3 years, 27.4% over 5 years, 19.7% over 10 years, 14.4% over 15 years, and 15.6% over 20 years. Gold is traditionally perceived as an asset class that beats inflation. According to FundsIndia’s Wealth Conversations Report, gold has outperformed inflation by 5-6% over the long run.

Another interesting insight from the report suggests that although gold returns have beaten inflation in the long term, it goes through long intermittent periods of subdued returns. Between 1980 – 1989, 1996 – 2002, and 2012 – 2019, gold generated 0% CAGR returns as prices remained flat during that period. From the high of the 1980s, it took gold 10 years to hit its 1980 peak once again. Historically, gold has delivered more than 7% returns, 2/3rd of the time across 7-year periods.

Also, the volatility in gold prices needs to be understood by investors. Gold saw 10-15% temporary declines almost every year, yet 78% of the time, gold ended the year with positive returns. Temporary market declines of 30-60% historically occurred once every 10-15 years.

Over the long term (10–15 years), gold has historically delivered returns above inflation. Long-term return expectations for gold are typically estimated at inflation plus 2–4%. However, gold can go through extended interim periods of subdued or flat returns.

Gold returns in INR are primarily driven by several key factors: central bank demand, US real yields, mining costs, inflation and US Fed rate policy, and movements in the USD/INR exchange rate. The fact that gold has been overlooked by most retail investors cannot be denied. Financial planners have long been suggesting a 10-15% exposure in gold, but still, not many hold gold in their portfolio. Today, as gold outperforms equity, debt, and other assets, investors are increasingly investing in it. A case in point – 25 Gold ETFs in January saw inflows of Rs 24,039.96 crore, after recording Rs 11,646.74 crore inflows in December.