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Summary: This Diwali, many Indians will buy gold: some for tradition and others for security. But what if the gold you buy isn’t the one that grows your wealth the most? Could equities, patiently held, have made you richer than the glittering metal in your hands? Find out in our analysis below.
Thinking of buying gold this Diwali? You’re not alone. For generations, Indians have turned to gold as a symbol of prosperity and security—a ritual as timeless as the metal itself.
And when prices soar as they have recently, the incentive to buy the yellow metal or invest in it only becomes stronger. But this is when it’s important to pause and ask: how has gold really done compared with equities when it comes to making investors richer?
To find out, we looked beyond point-to-point returns and instead compared the five-year daily rolling returns of gold and the Nifty 500 between October 6, 2020 and October 6, 2025.
This approach, which captures every possible five-year holding period within the last decade (2015–2025), shows how consistently each asset delivers over time and what investors would have earned had they invested at any point in time and held for five years.
And the findings are clear.
Equity outshines gold
- Average performance: Over the past decade, the Nifty 500 delivered an average five-year return of about 16 per cent, compared with 12 per cent for gold.
- Consistency of outperformance: The index beat gold nearly 80 per cent of the time, highlighting how much more often equities create wealth for patient investors.
- Chances of high returns: Nifty 500 delivered over 15 per cent returns about 60 per cent of the time, while gold crossed the same threshold only in 7 per cent of cases.
When we raise the bar to 20 per cent, the performance gap becomes more stark. The Nifty index gave 20 per cent-plus annualised returns 18 per cent of the time, while gold never did.
Put simply, if wealth creation is the goal, equities have been and remain the clear winner.
Why gold still earns a seat at the table
None of this means gold deserves to be banished from your portfolio. Far from it.
Our analysis shows that while equity’s returns have been higher, they’ve also been more volatile. Over the same period, the standard deviation of returns—a measure of volatility— stood at 4 per cent for the Nifty 500 and 2 per cent for gold.
That means if both asset classes were to give an average 10 per cent return, equities could swing between 6 and 14 per cent, while gold would likely move between 8 per cent and 12 per cent. What this means is that gold may not soar as high, but it also doesn’t fall as hard.
This stability is what makes gold valuable, not as a return engine, but as a diversifier. It smoothens portfolio volatility and provides ballast when risk assets take a hit.
Gold as a cushion: Revisiting 2020
If you need more proof, think back to 2020, the pandemic year, when markets were in free fall.
We looked at five-year returns ending on each day of 2020. Put simply, for every day of 2020, we calculated what an investment made five years earlier would have earned by that day.
The average five-year return for the Nifty 500 was a negative 1 per cent for the year. Gold, by contrast, held steady at around 8 per cent.
This shows how, even as market turmoil dragged equity returns down, the yellow metal provided positive returns.
Moreover, across the entire year, gold never delivered below 5 per cent returns, while equities did so nearly 25 per cent of the time. That resilience is why every well-built portfolio keeps some room for gold, not to chase highs but to ride out the lows.
What this means for your portfolio
A thoughtful investor would not choose between the two assets. Rather, they would balance them. Let equities drive your growth and gold keep your nerves calm when the ride gets bumpy.
A small allocation to gold (5–10 per cent) can dampen portfolio volatility and protect during turbulent periods, acting as a cushion rather than a growth driver.
Equity, meanwhile, remains the engine for growth. Keep them as the core of your portfolio for long-term wealth building.
Where to start investing in gold and equity?
Not sure where to begin when investing in gold and equity? Value Research Fund Advisor makes it simple. Our team of analysts handpicks the best-performing equity and gold funds and creates a customised portfolio tailored to your goals and risk appetite. Whether you want steady wealth growth, portfolio protection or a balance of both, we guide you step by step so you don’t have to guess, just invest smartly.
Also read: Everyone's buying gold. Should you?
This article was originally published on October 18, 2025.
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