As the festive season approaches, investors are once again debating the age-old question: Should one invest in gold or equities this Diwali? Both asset classes have their merits, but the performance over the past decade tells an interesting story.

Gold’s Surprising Outperformance in the Past Year

Over the past year, gold prices have delivered stellar returns, outshining equities and surprising many seasoned investors. Global uncertainties, rising geopolitical tensions, and central banks’ appetite for gold reserves have supported the precious metal.

For Indian households, gold has always been more than just an investment — it is tied to tradition, security, and cultural significance during festivals like Diwali and Dhanteras. This emotional attachment often gives gold an edge during the festive season.

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Dalal Street’s Mixed Performance

On the other hand, Dalal Street has witnessed volatility, with benchmark indices struggling to keep up with gold’s rally. While the long-term outlook for Indian equities remains strong, the near-term performance has left some investors disappointed. Rising global interest rates, concerns over global trade, and sector-specific challenges have weighed on returns.

Still, experts caution against looking at equities purely from a short-term lens. Historically, stocks have delivered steady compounding that far outpaces inflation, something gold has not consistently managed.

A Look Back: Gold vs Stocks Every Diwali Since 2010

To understand the real picture, it helps to analyze how both asset classes have performed if one had invested regularly during Diwali each year since 2010.

If an investor had allocated ₹10,000 every Diwali into Nifty 50 and the same into gold, the outcomes today would be strikingly different.

Equities (Nifty 50): Despite volatility, consistent compounding has led to significant wealth creation. The power of dividends, earnings growth, and India’s structural growth story has supported long-term gains.
Gold: Performance has been patchy, with long periods of stagnation followed by sharp spikes. While gold delivered strong returns in certain phases, it lagged equities in terms of wealth creation over the 15-year horizon.

This comparison highlights a key lesson: while gold provides safety and hedging benefits, equities are unmatched in delivering long-term compounding.

Why Gold Still Attracts Investors

Even though equities outperform in the long run, gold remains a favorite for festive investors. Here’s why:

Safe-Haven Asset – During global uncertainty, investors flock to gold as a hedge against inflation and currency weakness.
Cultural Significance – Buying gold on Diwali and Dhanteras is considered auspicious in Indian households.
Liquidity and Accessibility – Gold is easy to buy and sell, making it a preferred asset for small-ticket festive investments.
Recent Momentum – With international gold prices rallying, festive demand may see an additional boost this year.

Why Equities Shouldn’t Be Ignored

While gold offers security, stocks offer growth. Investors who stayed invested in equities during market downturns have reaped significant rewards over time.

Some reasons why equities are still the best long-term bet:

Wealth Creation – Nifty 50 has historically delivered CAGR returns in the double digits over long horizons.
Compounding Power – Systematic investments, especially during festive seasons, build significant wealth over decades.
India Growth Story – Sectors like banking, auto, energy, and technology are poised to benefit from India’s strong economic outlook.
Flexibility – Investors can diversify across large-caps, mid-caps, and thematic opportunities to balance risk.

Expert Opinions on the Festive Season

Market experts suggest a balanced approach this Diwali. According to analysts, gold can act as a hedge in times of uncertainty, but equities remain indispensable for long-term wealth building.

On Gold: Analysts expect gold prices to remain supported by central bank purchases and global uncertainty.
On Equities: Experts believe that the upcoming earnings season and festive demand will provide tailwinds to Indian companies, especially in auto, FMCG, and banking.

The Psychological Factor During Diwali

Diwali is not just about financial planning; it’s also about emotion. Investing during Diwali carries symbolic value for many families, marking a fresh start to financial goals.

Gold purchases are often linked to tradition.
Stock market investments symbolize growth and prosperity.

This blend of safety and growth makes the gold-versus-stocks debate more than just about numbers — it’s also about sentiment.

Balanced Strategy for Investors

So, what should investors do this Diwali? Experts recommend a balanced approach:

Allocate a small portion of festive savings to gold, honoring tradition and building a hedge against volatility.
Use the rest for equity investments, ideally through systematic investment plans (SIPs) or buying quality stocks with long-term growth potential.

This strategy ensures that investors get the best of both worlds — safety from gold and wealth creation from equities.

Key Takeaways

Gold has outperformed in the past year, but equities have historically delivered better long-term returns.
An investor who put ₹10,000 in Nifty 50 every Diwali since 2010 would have built significantly more wealth than investing the same in gold.
Gold remains attractive for tradition and safety, while equities are critical for growth and compounding.
A balanced festive investment strategy is the ideal way forward this Diwali.

Conclusion

The gold versus stocks debate resurfaces every festive season, but history shows that both play different roles in an investor’s portfolio. While gold protects against uncertainty and inflation, equities drive long-term prosperity.

This Diwali, instead of choosing one over the other, investors may find it wise to strike a balance. After all, festivals are about harmony — and so should be your investments.