When it comes to asset allocation, majority of Indians prefer Gold and Real estate over Stocks as they provide tangibility and sense of security. But sense of security is not sufficient as far as investments are concerned as savings in any form need to beat inflation for creating wealth.
So lets check how each of these asset classes have performed over last 5 years and whether Indians are right in their judgment of allocating majority of their investment capital in Real estate and gold:
CPI INFLATION IN INDIA
|CPI Inflation has averaged around 8% in past 5 years|
|Gold Price chart in INR per Ounce|
|National Housing Board Residex chart|
INDIAN STOCK MARKET
|Sensex from 2011 to 2016|
The only saving grace in past 5 years was Post office savings and tax saving bank deposits which have delivered over 8% return per annum and has largely not eroded investors wealth.
From the above analysis it's clearly visible that Stock Markets in India are performing better than Gold and Real Estate, however considering the global currency nature of Gold and sense of security associated with Real Estate, one must have exposure to each of these asset classes depending upon his risk profile.