With gold prices near the one lakh mark, investing in gold is in the news. Since the markets are volatile, the case for gold as a safe haven is getting stronger. As a result, comparison between gold and other forms of investments like equities and real estate are being discussed. While the going is good for gold, it is not the time to get carried away and invest too much of your money in gold and ignore real estate this Akshaya Tritiya.
₹1 lakh, its safe-haven appeal is rising amid market volatility, prompting comparisons with equities and real estate (Picture for representational purposes only)(Unsplash)” title=”Akshaya Tritiya 2025: With gold nearing ₹1 lakh, its safe-haven appeal is rising amid market volatility, prompting comparisons with equities and real estate (Picture for representational purposes only)(Unsplash)” />Let us go a little back and look at two profiles. Arjun Sharma from Bengaluru, invested ₹10 lakh in gold in April 2015, purchasing approximately 3,846 grams when the price was ₹26,000 per 10 grams. Over the next ten years, the price of gold surged, reaching ₹99,080 per 10 grams by April 2025. As a result, the value of his investment grew to ₹38.11 lakh, delivering a compound annual growth rate (CAGR) of 14.32 per cent.
Priya Verma chose to invest ₹30 lakh in a 1,200 sq ft apartment around March 2015, near the Meerut Expressway priced at ₹2,500 per square foot. By April 2025, the flat’s market value appreciated to ₹54 lakh, or ₹4,500 per square foot. Additionally, she earned an estimated ₹14.4 lakh in rental income over the decade. Combining capital appreciation with rental returns, her effective CAGR stands at around 8.6 per cent, and approximately 11 per cent when rentals are included.
Risks for Arjun and Priya
In case their portfolio is concentrated only in gold and real estate, both Arjun and Priya’s portfolio is subject to risk. “Gold prices are highly sensitive to global factors such as U.S. dollar strength, interest rate movements, geopolitical events, and inflation expectations. In periods of economic growth and rising interest rates, gold often underperforms relative to equity markets,” says Charu Pahuja , CFP CM, Group Director and COO, Wise Finserv, a financial services firm.
Further, gold doesn’t generate passive income like rent or dividends, making it less attractive compared to income-generating assets. Its value, though rupee-denominated, is influenced by global price and currency fluctuations. Physical gold also involves storage, insurance costs, and theft risk, adding to its overall burden.
“When it comes to Priya, real estate is highly illiquid. Selling a property can take several months, especially in down markets, resulting in distress sales,” says Pahuja.
Also, residential property in India offers low rental yields, typically around 2 to 3 per cent—often below inflation and equity returns. Returns can be further reduced by maintenance costs, taxes, and evolving regulations. Property values also depend heavily on location, infrastructure, and market cycles. Moreover, investing in a single property concentrates risk in one area, making it vulnerable to local downturns or oversupply.
The importance of diversification
“Diversification is an extremely important component of sound financial planning. Arjun and Priya have invested in gold and real estate respectively but not diversified beyond these asset classes. Most asset classes move up and down in cycles. While they have succeeded in generating decent returns in the last 10 years, there is no surety that they will continue to do equally well or better in the coming years,” says Gaurav Goel, SEBI registered investment advisor.
According to research by 1 Finance’s, a personal financial management and planning platform, equity, real estate, debt, and gold each behave differently, as seen in the correlation matrix.
“For example, equity and real estate have a near-zero correlation (-0.03), meaning their prices rarely move in tandem. Gold’s correlation with equity is also close to zero (-0.04), and with debt it’s slightly negative (-0.01). This low correlation is powerful: when one asset class underperforms, another may hold steady or even rise, cushioning your overall portfolio,” says Animesh Hardia, senior vice president, Quantitative Research at 1 Finance.
But diversification isn’t just about mixing assets-it’s about managing risk. The volatility data tells the story: equity delivers the highest long-term return (14.5%) but with significant swings (21.9% volatility). Gold offers strong returns (12.2%) but is also volatile (17.6%).
“Real estate and debt, meanwhile, are much steadier (3.4% and 1.0% volatility, respectively), but their returns are lower. By blending these, a diversified portfolio can achieve an attractive 11% return with just 8.2% volatility-much lower risk than holding only gold or property,” says Hardia.
Asset Class |
Return |
Volatility |
| Equity |
14.5% |
21.9% |
| Real Estate |
9.1% |
3.4% |
| Debt |
7.4% |
1.0% |
| Gold |
12.2% |
17.6% |
| Diversified portfolio |
11.0% |
8.2% |
Source: 1 Finance
The way forward
“Given that a significant amount of Arjun’s investment is in gold, he could consider investing some of his funds into equities or mutual funds that can possibly have a higher return rate over the long term. This would provide Arjun with some growth potential and lessen the reliance on a single asset class,” says Kunal Varma, CEO and Co-Founder of Freo, a financial services platform .
Meanwhile, Priya should reinvest her rental income in debt for liquidity and equity for growth, gradually moving away from a single-asset focus. Both should review their asset mix annually to stay ahead of inflation and market shifts.
Anagh Pal is a personal finance expert who writes on real estate, tax, insurance, mutual funds and other topics
