Gold vs Stock Market : Which Is the Better Investment Over 30 Years?

For the past 30 years, many investors have considered gold a safe bet, especially during uncertain economic times. At the same time, stock markets, especially the Nifty 50 in India and the S&P 500 in the U.S., have delivered long-term growth that has outpaced traditional assets like gold. Let's break down how an investment in gold, the Nifty 50, and the S&P 500 would have performed over the last three decades, using ₹1 lakh and $100,000 as examples.

Comparison of ₹1 Lakh and $100,000 Investments Over 30 Years

Many people in India purchase gold in the form of jewelry or ornaments, considering them an investment. However, when buying gold ornaments, you have to pay wastage charges (10-15%) ,GST and making charges. This means that if you spent ₹1 lakh on gold ornaments, up to ₹15,000 could be lost immediately due to these charges. Moreover, when selling, you won’t receive the full market price for the gold due to its impurities. This makes gold jewelry more of a cultural asset than a financial one.

• Gold's Historic Returns Over 30 Years:

  
  

  In 1994, the price of gold was around ₹4,600 per 10 grams in India. Fast forward to 2024, and the price is approximately ₹68,250 per 10 grams. This represents significant growth over 30 years, but let's calculate the exact return:

  
  

  1. If you had invested ₹1 lakh in gold in 1994, you would have bought approximately 217 grams of gold (₹1,00,000 ÷ ₹4,600 per 10 grams).

  2. In 2024, those 217 grams would be worth around ₹14.80 lakhs (₹68,250 per 10 grams × 217 grams).

  
  

  This gives an approximate annualized return of around 8% over 30 years, which is respectable but much lower compared to stock market returns.

  
  

• Nifty 50: Stock Market Returns Over 30 Years

  
  

  The Nifty 50, which tracks the top 50 companies in India, has shown strong long-term growth. In 1994, the Nifty 50 was around 1,000 points, and by 2024, it had risen to 25,145 points.

  
  

  1. If you had invested ₹1 lakh in the Nifty 50 in 1994, your investment would now be worth ₹25.14 lakhs. This represents a 2,414% increase over 30 years, delivering an annualized return of about 12.6%.

     
     

  Comparatively, the Nifty 50 has far outperformed gold over the last three decades. The stock market not only provides better long-term growth but also offers liquidity, meaning you can sell your investments easily without the complications of physical assets like gold.

  
  

• S&P 500: U.S. Stock Market Returns Over 30 Years

  
  

  For those looking at global markets, the S&P 500 in the U.S. is another powerful index to consider. In 1994, the S&P 500 was at approximately 460 points, and by 2024, it has grown to around 4,500 points. This represents a substantial increase.

  
  

  1. If you had invested $100,000 in the S&P 500 in 1994, your investment would now be worth around $980,000, representing an approximate annualized return of 10.7%.

     
     

  While currency fluctuations between the rupee and the dollar could impact the final value for NRIs, the S&P 500 still demonstrates significant growth, making it a strong option for global investors. It has outperformed gold by a large margin in dollar terms.

  
  

  Conclusion: Stock Market vs. Gold

  
  

  • Over the past 30 years, the Nifty 50 and the S&P 500 have significantly outperformed gold in terms of returns.

  • Gold has delivered steady but lower returns, around 8% annually, making it a safe asset for those who prioritize stability over growth.

  • The Nifty 50 has been a strong performer, with an annualized return of 12.6%, far outpacing gold, and offering better growth for long-term investors.

  • The S&P 500 offers 10.7% annualized returns in dollar terms, making it a solid option for those looking at international markets.

  
  

  While gold ornaments carry additional costs like wastage and making charges, which diminish their investment value, stock markets offer liquidity, higher returns, and easier access. For NRIs looking to build wealth, diversifying into mutual funds and index funds is likely a better strategy than relying solely on gold or real estate.