If you had put ₹1 lakh into gold just a year ago, you’d be smiling at a sweet profit of ₹48,000 today. That’s a hefty windfall. By comparison, the same amount parked in the Sensex or Nifty would have left you pretty much where you began, with flat or even slightly negative returns.
But gold hasn’t just pulled ahead this year. Its strong run goes back several years, and it’s been making stock market fans think twice. Here’s how the story unfolds.
Rewinding the clock: five and ten-year returns
- In 2020, gold was about ₹52,000 per 10 grams. That means ₹1 lakh invested then would have now turned to ₹2,19,000 today. That’s a 119% return, absolutely stunning.
- Over the same five-year stretch, the Sensex wasn’t far behind, handing out a still-solid 112% return, turning ₹1 lakh into ₹2,12,000.
- Go back to 2015, and you’ll find gold was trading at just ₹26,000 for 10 grams. Fast forward to now, it is around ₹1,14,000! A staggering 338% jump. An investment of ₹1 lakh became a whopping ₹4.8 lakhs.
- The Sensex during this decade also performed, 215% up, or ₹1 lakh growing to ₹3.15 lakh.
So the big question: Is it time to put even more faith (and rupees) in gold?
Don’t get carried away: what investors must know
Historical returns look shiny, but the golden rule of investing remains: past returns can’t guarantee the future. Gold often enjoys the limelight during periods of global chaos: wars, inflation, and banking turmoil. Investors run to it as a “safe haven” because it’s trusted worldwide and shields savings from shocks.
But it’s not always party time for gold. There are times when equities perform way better, outshining the yellow metal. Gold has already rallied a lot, which means it can and in the past has underperformed. This usually happens when economies are booming and stock markets are rallying, and inflation concerns subside.
Why balance wins: equities and gold
Overcommitting to gold simply because of recent returns can be risky. Experts suggest one can allocate around 10-15% allocation to gold for a diversified yet balanced investment portfolio.
Gold and equities generally react inversely to each other. When markets are surging, gold prices dampen, and on the other hand, when the market is having trouble, gold shines and the prices shoot up. Having a balanced portfolio can save your investments from volatility.
Key Benefits of a Balanced Portfolio
- Reduces risk by spreading investments
- Offers stability during uncertain times
- Captures growth potential during bullish stock cycles
Think long-term, think diversification
Gold may be shining bright right now, but the smartest move is to treat gold investment as a defence mechanism against market volatility and global uncertainties. Have a healthy balance of equities and gold in your portfolio to get the best of both worlds.
