Gold vs equity vs debt: Where to invest in 2025? Check investment strategy

Market Outlook 2025: For an investor with moderate risk appetite, they say an ideal portfolio for 2025 would mean investing 50% of his/her corpus in large-caps, followed by 35% in gold and 25% in debt

Investment in 2025 market outlook for 2025: Wars between Ukraine-Russia and Iran-Israel, coupled with weak corporate earnings and sticky inflation, made 2024 a year of risk aversion.

 

Safe haven bets like Gold and Silver outperformed riskier investment bets with a surge of 25.25 per cent and 23.11 per cent, respectively, thus far in calendar year 2024 (till December 25). By comparison, equity benchmarks BSE Sensex and NSE Nifty50 have risen around 9 per cent each during this period. 

 

Moving into 2025, analysts suggest investors should allocate a higher portion of one’s corpus towards Gold and Silver during the year, than he/she did last year, to generate better returns.

 

 

For an investor with moderate risk appetite, they say an ideal portfolio for 2025 would mean investing 50 per cent of his/her corpus in large-caps, followed by 35 per cent investment in gold, and 25 per cent in fixed income assets.

 

"Considering the current ongoing war-like situation and its impact on the world economy, it is prudent that investors resort to investing (more) in Gold in 2025 as it has proved to be a reliable store of value. Besides, central banks, world over, are adding the yellow metal to their reserves, suggesting higher returns going ahead," said Apurva Sheth, head of market perspectives and research, SAMCO Securities.

Gold investment in 2025

 

According to experts, fluid economic conditions globally, coupled with increased gold demand by central banks lifted prices of the yellow metal. As per reports, global central banks, together, accumulated gold reserves of more than 500 tonne in 2024. 

 

Specifically, in India, assets under management in gold and silver ETFs surpassed Rs 30,000 crore and Rs 7,500 crore, respectively, in 2024. Notably, the Central government had cut import duties on gold and silver in Union Budget 2024 which, possibly, fueled demand.

 

Gold moved from a price of $2,091 per ounce, seen at the end of 2023, to over $2,600 per ounce at present. Gold hit a record high of $2,826.3 per ounce on October 30, 2024.

 

As per a World Gold Council report, gold is poised for its best annual performance in more than a decade. However, the market consensus of key macro variables such as GDP, yields, and inflation – if taken at face value – suggests positive but much more modest growth for gold in 2025, it said.

 

"Upside could come from stronger than expected central bank demand, or from a rapid deterioration of financial conditions leading to flight-to-quality flows," the report pointed out.

 

Silver, too, analysts said, may witness continued upward momentum in 2025 amid higher industrial demand and weak supply chain.

 

"Silver is down, but not out. We expect Silver prices to find support near Rs 85,000-Rs 86,000 per kilogram for targets towards Rs 1,11,111 and Rs 1,25,000 on domestic front and $38.55 and $43 on Comex. Buying on dips is recommended," said Manav Modi, commodity analyst at Motilal Oswal. 

 

That said, a reversal in monetary policy, leading to higher interest rates, would likely bring challenges for gold and silver, analysts cautioned.

 

Equity investing in 2025

Meanwhile, for equities, analysts say the asset class’ inherent wealth generation capability, over a long-term period, renders it as the “best asset classes.” Large-caps, however, should be investors’ go-to basket.

 

“We believe it could be a year of outperformance by large-caps over small/microcaps. We may see sector rotation with better returns in IT, Pharma, Textiles, and a few select consumer stocks,” said Gaurav Dua, head of capital market strategy at Mirae Asset Sharekhan.

 

Vinod Nair, head of research at Geojit Financial Services, concurred that amid a multi-asset classes strategy, scales title towards large-caps over mid-and small-caps in the short to medium term due to premium valuation of the broad market and peak premiumisation of midcaps.

 

Debt investing in 2025

As regards investment in debt securities, Dua of Mirae Asset Sharekhan says investing in fixed income asset for a duration with 3-4 tenure would be a sweet spot as the rate cut by the Reserve Bank of India (RBI) would pull down the yield curve.

 

Notably, yields on the 10-year Government Securities have slipped roughly 6 per cent thus far in 2024, moving in a range of 6.66 per cent to 7.24 per cent during the year.