Is Gold the Best Performing Asset Class with 15% Returns Over 20 Years?
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Synopsis
Discover how gold's exceptional performance over the past 20 years outshines other asset classes with a remarkable 15% return. Learn about the factors driving this trend and gain insights into the broader financial landscape.
Key Takeaways
- Gold outperformed other assets with 15% returns.
- Real estate and debt investments lagged behind.
- Mid and small-cap stocks have shown strong growth.
- Market corrections are common but often temporary.
- Future growth in equities is anticipated if consumption is revived.
New Delhi, Dec 11 (NationPress) Gold has significantly outperformed many asset classes over the long term, yielding a compounded annual return of 15 percent in rupee terms across a span of 20 years. This figure eclipses the 13.5 percent return of Indian equities as indicated by Nifty 50 returns, as reported on Thursday.
The FundsIndia report revealed that real estate produced a return of 7.8 percent while debt investments generated 7.6 percent over the same period. Additionally, Indian equities lagged behind the 14.8 percent return from US equities, as per the S&P 500.
In a more recent five-year timeframe, gold's performance was even more impressive, showcasing a five-year CAGR of 23.2 percent compared to 16.5 percent for Indian equities and 19.6 percent for US equities, according to FundsIndia.
Mid- and small-cap stocks outshone large caps over 20 years, with the Nifty Midcap 150 total return index achieving 16.5 percent and the Nifty Smallcap 250 TRI reaching 14.3 percent, contrasted with 13.8 percent for the Nifty 100 TRI. While mid and small-cap stocks exhibit greater volatility, they also demonstrate robust long-term compounding, with midcaps providing a 19.6 percent CAGR over a 22-year period.
Analysts credited the rise of gold to factors such as central bank purchases, safe-haven demand driven by aggressive monetary policies, geopolitical tensions, a weakening rupee, and elevated equity valuations.
The report emphasized that debt markets remain stable, offering 7-8 percent long-term returns, thus reaffirming their position as essential shock absorbers in investment portfolios.
Market corrections of 10-20 percent are commonplace nearly every year, yet 75-80 percent of those years conclude positively, highlighting that volatility is temporary while growth is persistent, it noted.
Historically, substantial stock market declines exceeding 30 percent have typically recovered within 1-3 years, often followed by significant upside, the report stated.
A recent analysis from HSBC Global Investment Research indicated that a double-digit return from Indian equities could be anticipated next year if policy measures stimulate consumption along with a supportive regulatory environment.
Point of View
It's evident that gold continues to be a reliable asset for long-term growth. With its strong performance, it serves as a hedge against volatility in the financial markets, reinforcing the importance of diversifying investment portfolios.
NationPress
12/12/2025
Frequently Asked Questions
What is the return rate of gold over the last 20 years?
Gold has achieved a compounded annual return of 15 percent in rupee terms over the past 20 years.
How does gold's performance compare to Indian equities?
Gold outperformed Indian equities, which had a return rate of 13.5 percent according to Nifty 50 returns.
What has driven the rise in gold prices?
Factors include central bank purchases, geopolitical concerns, and a weakening rupee.
Are mid and small-cap stocks a good investment?
Yes, they have shown strong long-term compounding, with midcaps providing a CAGR of 19.6 percent over 22 years.
What are the typical market corrections?
Market corrections of 10-20 percent occur almost every year, but 75-80 percent of these years end positively.
