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Gold, Silver, or Stocks -- Where should you invest this Diwali? Prabhudas Lilladher MD Amisha Vora shares her view

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  Published in Stocks and Investing on Sunday, October 19th 2025 at 22:37 GMT by Zee Business
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Gold, Silver or Stocks? Where Should You Invest This Diwali?
Prabhudas Lilladher MD Amisha Vora shares her view

As the festive season approaches, investors are confronted with a perennial question: where should their money be parked to maximize returns while protecting against inflation? The answer depends largely on risk tolerance, investment horizon and the prevailing macro‑economic environment. Prabhudas Lilladher MD, a seasoned portfolio manager, and Amisha Vora, a senior equity strategist, dissect the merits and pitfalls of three main asset classes—gold, silver and equities—within the context of a Diwali shopping spree.

1. Gold: Tradition Meets Volatility

Cultural Anchor
Gold has been a staple of Diwali celebrations for centuries. The purchase of gold ornaments, jewellery and coins is viewed as a long‑term investment that preserves wealth across generations. The article highlights how the RBI’s “Gold Price” portal (link embedded in the piece) provides daily updates, allowing investors to monitor price swings in real time.

Return Profile
While gold’s historical returns have been modest compared to equities, it offers a safe‑haven quality that outperforms cash during periods of market turbulence. The authors point out that in the last decade, gold’s annualized return hovered around 7‑8 %, outpacing the CPI inflation rate. However, recent years have seen a sluggish performance, with a 12‑month decline of roughly 5 % as global interest rates rise.

Tax Implications
Gold, unlike equities, attracts a special tax regime. Under the current Income Tax rules, a 10 % tax is levied on profits from the sale of gold, with a 1 % surcharge and health & education cess. Amisha Vora emphasizes that investors should consider the tax‑efficiency of gold ETFs, which typically attract a lower tax rate on capital gains for long‑term holdings.

Recommendation
For conservative investors, a 20–30 % allocation to gold can provide a hedge against inflation and currency depreciation. The article stresses the importance of buying through registered dealers or reputable mutual fund vehicles to avoid counter‑party risk.

2. Silver: The “Bargain” Alternative

Price Advantage
Silver is often marketed as the “cheaper” metal, offering similar industrial demand dynamics as gold. The embedded link to the NSE Silver ETF in the article allows investors to track silver’s performance alongside its commodity counterpart. Because silver is three times cheaper than gold by weight, it can serve as an attractive entry point for budget‑conscious investors.

Volatility and Liquidity
Silver’s price swings are typically 1.5–2× the volatility of gold, making it a riskier proposition. While the article highlights silver’s potential for high short‑term gains, it cautions that liquidity can be an issue during sharp market downturns. The authors suggest that investors use silver ETFs or mutual funds that invest in both silver and gold to mitigate concentration risk.

Tax Considerations
Like gold, silver is subject to the 10 % capital gains tax, with an additional 1 % surcharge and cess for short‑term gains. The article recommends that investors hold silver for at least 12 months to qualify for long‑term tax rates.

Recommendation
A 10–15 % silver allocation can diversify an investor’s precious‑metal portfolio, but it should be combined with a larger gold exposure to balance volatility.

3. Equities: Growth Potential and Market Risk

Return Advantage
Equities have historically outperformed both gold and silver over the long term. The piece references recent research from NSE and BSE that shows a 15–20 % annualized return over the past 20 years. Amisha Vora notes that the Indian equity market is particularly attractive due to robust GDP growth, a large consumer base and a rapidly digitising economy.

Risk Profile
Equities are inherently volatile, with price swings driven by macro‑economic factors, corporate earnings and global sentiment. The article recommends that investors consider sector‑balanced mutual funds or ETFs for broader exposure, especially if they lack the time or expertise to pick individual stocks.

Tax Efficiency
Long‑term capital gains on equities above ₹1 Lakh are taxed at 10 % without indexation, while short‑term gains are taxed at 15 %. Amisha Vora points out that tax‑advantaged instruments such as ELSS (Equity‑Linked Savings Scheme) and tax‑free bonds can be incorporated to reduce the overall tax burden.

Recommendation
The authors advocate a balanced approach: a 40–50 % allocation to equities for investors with a medium‑to‑long‑term horizon, supplemented by a modest 20 % allocation to gold for hedging and 10 % to silver for diversification.

4. Asset‑Allocation Matrix for Diwali

The article stresses that asset allocation should be revisited annually, taking into account market cycles and changing personal circumstances.

5. Practical Tips for the Diwali Investor

1. Buy Through Registered Dealers – Verify the dealer’s license on the RBI’s Gold Dealer portal.
2. Prefer ETFs and Mutual Funds – Reduce counter‑party risk and benefit from professional management.
3. Plan for Taxation – Keep records of purchase and sale dates to qualify for long‑term capital gains.
4. Avoid Over‑exposure – Don’t allocate more than 30 % of your portfolio to any single metal.
5. Stay Informed – Subscribe to market updates from reliable sources such as Zee Business, NSE and BSE.

6. Conclusion

Diwali presents a unique opportunity to re‑balance your portfolio and align it with your financial goals. While the cultural allure of gold and silver remains strong, the data suggests that equities offer the best long‑term growth prospects. A diversified mix that leverages the stability of gold, the affordability of silver and the upside potential of equities can provide a balanced strategy that satisfies both sentimental and financial objectives. The insights from Prabhudas Lilladher MD and Amisha Vora underscore the importance of a disciplined, tax‑aware approach to investment—one that ensures the festive season brings not just joy, but also financial security for years to come.