Gold vs Nifty 50 Returns Compared: Who Wins the 5-Year Investment Face-Off?
Gold vs Nifty 50 Returns Compared:If you had ₹5,00,000 five years ago, would you have invested in Gold, the age-old safe haven, or Nifty 50, India’s premier equity index representing 50 largest companies in the country? It’s a question a lot of investors are wondering about, particularly with both asset classes posting stellar returns in recent years. Let’s find put how your investment would have fared in each, data-supported, and determine which asset prevailed.
Gold vs Nifty 50 Returns Compared: Gold’s Performance
Gold, of course, usually celebrated as a hedge against inflation and currency depreciation, has done more than just preserve wealth over the past five years. It’s actually helped it grow exponentially. Back in October 2019 gold was trading at around ₹36,000 per 10 grams. Flash forward to mid-2024 and it’s skirting ₹79,600 per 10 grams. That’s more than doubling in the value, which works out to a ~17.2% CAGR.
Had you invested ₹5,00,000 in gold in 2019, your investment would be worth about ₹11,46,000. This return is, of course, not just due to market price appreciation. Had you picked SGBs, the returns would have been even sweeter. SGBs floated in May 2020 matured with more than 108% return in five years, plus a 2.5% annual interest, offering investors a total CAGR of close to 15.8% to 17%, depending on timing.
Gold vs Nifty 50 Returns Compared: Nifty 50’s Performance
Meanwhile, the Nifty 50 index of top 50 blue chip companies on NSE has witnessed a similar strong growth curve. In October 2019, the Nifty 50 was approximately 11,300. As of mid-2024, it trades near 24,000 levels, almost doubling in five years. This gives a CAGR of around 16.9%, on par with gold’s return during that period.
Had you invested ₹5,00,000 in an index fund or ETF tracking the Nifty 50 today, it would be worth approximately ₹10,90,000. The Nifty 50 pays us dividends, making its returns all the more sweeter. Based on historical data posted by the NSE, the Total Return Index (inclusive of dividends) would have increased this number even more, perhaps making it equal or marginally greater than gold’s growth in some periods.
The above mentioned numbers may vary fepe ding on the factors discussed. If you glance at these numbers, gold actually marginally trounced Nifty 50 on a pure price appreciation basis at least for SGB investors. Then factor in dividends from Nifty 50, and the gap between the two shrinks. Both asset classes almost doubled the capital in five years, proving their mettle in a bull market environment.
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The Factors Behind These Returns
Gold’s ascent was largely driven by global economic uncertainty stemming from the COVID-19 pandemic, increasing inflation and geopolitical conflicts. Investors globally flocked to gold as a safe-haven, driving up its demand and price. Meanwhile, India’s stock market was buoyed by robust earnings, government reforms, FDI inflows and a post-COVID economic rebound that sent the Nifty 50 index to record highs.
So which one should you go for?
Gold gave us a bit better returns over the last five years. It’s important to factor in your investment objectives and tolerance for risk. Gold is a fantastic base money and a fantastic hedge, but it doesn’t yield income on a recurring basis (outside of SGB interest). The Nifty 50 provides exposure to India’s growth engine, possible dividends, and long-term capital appreciation.
The smart bet is not on one or the other, but on diversification. Okay, so financial advisors say to put 10–20% of your portfolio in gold for stability and the rest can be in equities for growth. This way, you’re safeguarded against volatility while still capturing market upside.