Gold or Nifty50: What should you invest in for better returns this Akshaya Tritiya?

Akshaya Tritiya is traditionally considered an auspicious occasion for gold purchases in India. But with the changing market environment and lifestyle this tradition needs to evolve. For investing in gold, there are many alternatives besides physical gold, such as Sovereign Gold Bonds, digital gold, or Gold ETFs. Similarly, people can opt for NiftyBees, an Index ETF tracking 50 constituents of the Nifty50 Index. While many prioritize gold for its cultural significance, the question of long-term wealth creation arises. It often sparks a debate – which of these assets delivers superior returns? Let’s analyze how gold and the Nifty 50 index fared since Akshay Tritiya on April 22, 2023, till May 7, 2024.

Performance Comparison – Nifty 50 vs. Gold (Akshaya Tritiya 2023 – May 7, 2024)

As shown in the above table, the Nifty 50 significantly outperformed gold in terms of returns since Akshay Tritiya 2023. The Nifty 50 delivered a return of 26.55%, exceeding gold’s return of 19.18% by a wide margin. This data suggests that for the past year, the Indian stock market represented by the Nifty 50 has been a more rewarding investment choice compared to gold for the selected timeframe. However, considering the 5-year timeframe Gold has outperformed Nifty50 by delivering 124% returns as to 90% of Nifty 50.

Read: Best Gold ETFs in India to Invest in 2024

Diversification is Key

While the recent performance favours the Nifty 50, a well-diversified portfolio can benefit from including both gold and equities. Here’s a closer look at the advantages each offers:

Gold has a historical reputation for acting as a hedge against inflation. During periods of rising inflation, the price of gold tends to increase, helping to preserve the purchasing power of your portfolio. It is often considered a safe-haven asset. Its value tends to appreciate during market downturns and periods of economic uncertainty, providing stability within your investment portfolio.

The stock market, represented by the Nifty 50, offers the potential for significant capital appreciation over the long term. How to take advantage of this, simply by investing in a Nifty 50 ETF or an index fund which tracks Nifty.

Conclusion

This analysis reveals that the Nifty 50 has outperformed gold since the last Akshay Tritiya. However, past performance doesn’t guarantee future results. Gold’s role as an inflation hedge and safe-haven asset remains valuable, offering stability during market volatility.

The ideal investment choice depends on your individual risk tolerance, investment goals, and overall portfolio allocation. Consider including both gold and a Nifty 50 ETF in your portfolio to achieve a balance between stability, growth potential, and protection against inflation. Remember, diversification is key to a robust and resilient investment strategy.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.