Do Equities Outperform Gold in Long-Term Returns and Capital Protection?
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Synopsis
In a compelling analysis, a recent report reveals that Indian equities significantly outperform gold in long-term returns and capital protection. With an 11.5% annualized return, equities are positioned as superior wealth builders compared to gold’s 8-10% returns. Discover why investing in equities might be the smarter choice for your financial future.
Key Takeaways
- Indian equities offer higher annualized returns than gold.
- The Nifty50 index has a high likelihood of capital protection.
- Investing in gold requires a longer time frame for effective capital preservation.
- Gold should be used as a minor hedge in portfolios.
- Equities historically outperform gold over the long term.
New Delhi, Oct 16 (NationPress) Indian equities have yielded around 11.5 percent in annualized returns, outpacing gold, which has offered returns of approximately 8–10 percent, as indicated by various rolling-period analyses spanning from 1990 to 2025, according to a recent report.
A study conducted by OmniScience Capital highlights that the Nifty50 index has consistently delivered superior average returns for investment horizons of three years or more, coupled with a significantly enhanced probability of capital preservation.
The report further reveals that there is a 98.1 percent chance of safeguarding principal investment in Nifty for durations of three years or longer, in stark contrast to an 84 percent likelihood for gold over the same period.
According to the firm, investors should maintain their investments for about seven years to achieve a 99.3 percent certainty of capital protection with gold.
“The role of gold is best suited as a minor hedge, ideally not exceeding 10–20 percent of an investment portfolio,” stated Ashwini Shami, President and Chief Portfolio Manager of OmniScience Capital.
The report noted that gold prices can experience significant surges, particularly during macroeconomic crises, followed by notable declines once the crises subside. The post-crisis decline has ranged from (-) 17 percent to (-) 44 percent.
In a comparative analysis of the S&P 500 and global gold prices, the benchmark index has returned about 9.4 percent annually over the last 40 years, compared to 5 percent for gold.
The study concludes that while gold remains a safe-haven asset, both Indian and global equities are more effective as long-term wealth builders, consistently outpacing inflation.
On the topic of gold's effectiveness as a hedge against inflation, the investment management firm noted a weak correlation between gold and inflation metrics.
OmniScience emphasized that gold is more influenced by global interest rates, movements in the US dollar, central bank acquisitions, and investor risk sentiment, rather than the Consumer Price Index (CPI).
Point of View
It’s crucial to acknowledge the robust findings indicating that while gold serves as a reliable safe-haven asset, the long-term prospects for wealth accumulation lie predominantly in equities. This insight should guide investors towards making informed decisions that align with their financial goals.
NationPress
16/10/2025
Frequently Asked Questions
What returns can be expected from Indian equities?
Indian equities have provided approximately 11.5 percent annualized returns over various periods.
How does gold perform compared to equities in the long run?
Gold has historically returned around 8–10 percent, which is lower than the returns from equities.
What is the likelihood of capital protection in Nifty compared to gold?
There is a 98.1 percent chance of principal protection in Nifty for three years or more, versus 84 percent for gold.
How long should one invest in gold for capital protection?
Investors should remain invested in gold for about seven years to achieve a 99.3 percent probability of capital protection.
Is gold an effective hedge against inflation?
The correlation between gold and inflation measures is weak, indicating that gold may not be the best hedge against inflation.
