Smart Investment Strategies for 2026: Diversifying Across Debt, Equity, Gold, and Real Estate

The year 2025 was an exceptional year for investors, marked by unexpected turns and deviations in returns among various asset classes. While gold and silver saw record price rises, the performance of other asset classes like equities and debt was mixed. Large cap stocks, represented by the NIFTY 100 index, saw a modest annual gain of 8.51%, while midcap stocks, represented by the NIFTY Midcap 150 index, registered a decent gain of 12.22%. However, small-cap equity stocks, represented by the NIFTY Smallcap 250 index, experienced negative returns, with a modest return of -6.83%.

Debt products also saw a decline in returns, with fixed deposit rates falling substantially during the year. However, the yield of the 10-year government bond saw only a marginal decline, from 6.78% at the beginning of the year to 6.59% at the end of 2025. This scenario underscores the importance of a diversified portfolio with a mix of unrelated assets.

As we move into 2026, investors are looking to get their asset allocation strategy right. ET Wealth Online spoke to experts to understand how different asset classes can perform in the new year and where investors can expect good returns.

How Can Debt Investments Perform in 2026 and Where Should Investors Invest?

In 2025, the Reserve Bank of India (RBI) cut the repo rate by 125 basis points, leading to a decline in fixed deposit interest rates. However, bond rates rose. Core Consumer Price Index (CPI) inflation for November 2025 eased to 4.4%, while the headline inflation was 0.71%, providing the RBI with the opportunity for further rate cuts.

Ashish Shanker, MD & CEO of Motilal Oswal Private Wealth, suggests that traditional accrual strategies like fixed deposits may continue to underperform due to further RBI rate cuts and liquidity improvements. Shanker advises investors to focus on high-yielding strategies and income-generating real assets like REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts) for core accrual strategy allocation. For shorter holding periods (1-2 years), Shanker recommends relatively liquid fixed income alternative solutions like Arbitrage Funds and Hybrid SIF Funds.

Ravi Singh, Chief Research Officer from Master Capital Services Ltd, notes that if the current low inflation scenario continues, the expectation for further repo rate cuts by the RBI will rise, which can provide meaningful gains for bond and debt investors. Singh believes that while fixed deposit rates will remain compressed across major banks, the debt market can offer better opportunities for investors in 2026 if the rate cut scenario remains favorable.

Will Equities Bounce Back in 2026?

Equities in India provided modest returns to investors in 2025. The Nifty 50 rose by 11.58%, the Nifty Next 50 by 2.90%, the Nifty Midcap 100 by 6.36%, while the Nifty Smallcap 100 slipped by 5.02%. Will the share market recover in 2026 and provide better returns to investors?

Sachin Jain, Managing Partner of Scripbox, believes that the subdued performance of equities in 2025 could serve as a healthy breather. Jain states that the country is performing strongly on both macro and microeconomic parameters, and corporate India’s growth outlook remains robust. He predicts that there is significant headroom for growth ahead, and equities will continue to play a pivotal role in long-term wealth creation.

Nishant Agarwal, Senior Managing Partner of ASK Private Wealth, expects a revival in earnings for corporate India in 2026, driven by consumption and private capex. Agarwal also predicts that large and midcap stocks may outperform small caps, especially if foreign institutional investor (FII) flows return to India. He adds that active managers should perform better than indices or passive styles in 2026.

Ravi Singh agrees, noting that a domestic push and positive resolution of key overhangs such as tariff-related issues could add momentum to the Indian stock market. Singh highlights that economic momentum and earnings visibility are supported by policies like GST rationalization, easing of interest rates, and the government's focus on infrastructure and capital expenditures.

Will Precious Metals Like Gold and Silver Continue to Deliver High Returns in 2026?

Precious metals such as gold and silver delivered extraordinary returns to investors in 2025. The price of gold on the Multi Commodity Exchange of India (MCX) soared by around 74%, while the price of silver skyrocketed by 167%. The gold price rise was primarily due to central banks' buying, while silver's price increase was driven by heavy industrial demand. Will precious metals deliver similar returns in 2026, or will their rally stop?

Ashish Shanker believes that gold may provide moderate returns, with low double-digit gains aided by modest INR depreciation over the medium term. Shanker suggests that near-term corrections are possible for silver. Investors with large exposures may consider partial profit-booking, while those with low or no exposure can accumulate in a staggered manner, capitalizing on market dips.

Sachin Jain recommends allocating 10% of an investment portfolio to gold and silver at all times. Jain notes that gold and silver are emerging from a long consolidation phase and have room for better performance. However, he warns that gold and silver operate in long super-cycles, and there can be extended phases where returns remain muted.

Will the Real Estate Sector Grow in 2026 and How Can Retail Investors Enter the Market?

Nishant Agarwal predicts that broader real estate markets should perform in line with nominal GDP growth rates, at around 10-11%. Agarwal advises that retail investors can enter the market through listed Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) to gain diversification benefits and avoid the risk of a specific project, builder, or segment.

Sachin Jain suggests that retail investors evaluate this segment carefully, keeping their own risk appetite in mind. Jain points out that a single real estate exposure would not be less than Rs 20–25 lakh, which is a significant allocation for a retail investor and can pose a concentration risk. REITs and INREITs (India and Real Estate Investment Trusts) offer an opportunity for retail investors to participate in this segment, but these are still early days.

Ashish Shanker expects residential real estate to deliver single-digit returns in 2026, given the low rental yield of 2-3%. Shanker supports REITs for real estate investment, noting that they offer a more efficient and diversified way to access real estate-linked cash flows, whether commercial, warehouse, or data center. For investors with a higher risk appetite seeking enhanced returns, Jain advises investing in professionally managed real estate funds across debt and structured equity strategies.

In conclusion, 2026 presents a range of investment opportunities across debt, equity, gold, and real estate. A well-diversified portfolio, tailored to individual risk appetites and financial goals, can help investors navigate the market and achieve their financial objectives.