Long-term historical trend shows that equity tends to outperform other asset classes over 15, 20 and 30 years. But should investors then look to buy the benchmark index or the broader markets? Well, the answer lies in diversification. Since a broader market index has a wider selection of companies, it has managed to beat benchmark returns. Between 1995 to 2005 (till June), Nifty 500 has delivered a massive 15.2% CAGR earnings vs 14.1% rise in Sensex.

"Equities do tend to perform best over longer periods of time," says Vaqarjaved Khan, CFA, Sr. Fundamental Analyst, Angel One. He attributed the rise in the equity market to the fast-growing Indian economy. Data shows that over the years, equity has either given competitive returns or beaten the yellow metal. Rajesh Cheruvu, MD and Chief Investment Officer at LGT Wealth India said that gold has indeed delivered attractive long-term returns.

Gold remains essential for diversification and risk management, but equities will continue to anchor long-term wealth creation. Analysts are quick to point out the volatile nature of the equities as well, saying that in the short run, investors face greater risk. An aggressive investor in his 20s/30s can afford to allocate a higher portion of his portfolio towards equities as he has a longer investment horizon and can take on risk and volatility. For a young investor, he advises 70% allocation to equities (40% in Nifty