Comparison of Asset Classes: Gold, FD Vs Equity Returns 


When it comes to investing, the first question that comes to mind is – “Invest in what?” Every investor has his or her own appetite for risk and any rash and untimely decision can prove to be costly. This is because you need to choose from several asset classes having varying degrees of volatility and risk-return potential. Therefore, one has to weigh the pros and cons before zeroing in on an asset class to invest in. 

A conventional investment portfolio of an Indian investor contains gold, real estate, fixed income products and very little equity or equity-linked products. 

When Akshaya Tritiya is just a month away and Given Indians’ general love for gold, is considered an auspicious occasion to buy this precious Yellow Metal, but always take an informed decision.

Here is the comparison ( Numbers Don’t Lie )

Assume you’ve invested Rs.1 Lakh each in FD, gold, silver and Sensex 40 years ago ( Since 1979 )

 As of 31’st March 2019 the value is as follows:

  • FD- Rs.30.27 lakhs ( 8.9% Annualised Returns )
  • Gold- Rs.34.67 lakhs, ( 9.26% Annualised Returns )
  • Sensex – Rs.1.28 Crores ( 12.9% Annualised Returns )

To put it another way, during last 40 years:

Fixed Deposits has multiplied wealth by 30 times

Gold by 34 times

Sensex by 128 times

This post does not encourage to put all your money into equities, nevertheless diversification is the key for Wealth Creation.

Have you diversified enough to get optimum returns from all Asset classes? That is the question you need to ask yourself.

Conclusion

The Thumb Rule of wealth creation says don’t put all your eggs in one basket. It restricts the damage to your financial well-being in case one asset class or instrument goes for a toss.

Diversification is a risk-management technique that mixes a wide variety of  investment within a portfolio.  Keep considerable portion of your wealth in Equities also to get higher returns, Quick Liquidity and Tax efficient investment.

Pls consult your Wealth Consultant before you make any investment in Equity Instruments, with the rising investor needs and complex financial products, i would strongly advise you to take recommendation before you choose your investment decisions.

Join me for a cup of coffee to discuss your investment requirement and i am reachable at 9841058689.

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