Gold vs. SIP vs. FD Calculator

Tri-Asset Class Allocations in India

In the Indian cultural and economic landscape, three core asset classes form the backbone of personal finance:

1. Equity Mutual Fund SIPs: Representing high-yielding corporate business growth, typically compounding at a default benchmark CAGR of 12.0%.
2. Physical Gold: The traditional cultural store of value and inflation hedge, typically compounding at a benchmark CAGR of 8.0%.
3. Fixed Deposits (FDs): The risk-free bank interest benchmark offering high liquidity and security, yielding a default benchmark rate of 6.5%.

This calculator enables you to model a side-by-side comparison of either a monthly SIP or a one-time Lumpsum investment across all three assets to understand the ending wealth gaps.

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The Comparative Mathematics

To prevent compilation errors, the mathematical formulas are outlined below cleanly without any curly braces:

1. Lumpsum Investment Mode (One-Time Purchase)

For a lumpsum principal (P) invested over T years, the final maturity value (V) for any given compound rate (R%) is:

Maturity Value = Principal * (1 + R / 100) ^ T

• Equity Lumpsum: Uses the custom Equity CAGR rate.
• Physical Gold Lumpsum: Uses the custom Gold CAGR rate.
• Bank FD Lumpsum: Uses the custom FD Interest rate.

2. Systematic Investment Plan (SIP) Mode

For a recurring monthly SIP amount (P) over T years (N months = T * 12), with monthly compounding at an annual rate (R%):

Monthly return rate (r) = R / 1200

Maturity Value = Principal * [ ( (1 + r)^N - 1 ) / r ] * (1 + r)

• Total Capital Saved: Amount * 12 * Years.
• Wealth Delta Gap: The difference between the highest-yielding maturity value and the lowest-yielding maturity value:

Delta Gap = Maximum(Equity, Gold, FD) - Minimum(Equity, Gold, FD)

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Tactical Asset Class Insights

1. Equity Mutual Funds (High Growth, High Volatility)

Equity investments represent active ownership in companies. Over long tenures (10+ years), Indian equities have consistently outperformed all other major asset classes. However, they are subject to short-term market corrections.

2. Physical Gold (Inflation Hedge, Cultural Store)

Gold acts as an insurance policy. During global geopolitical crises, market downturns, or currency inflation surges, gold prices typically rise, balancing out equity portfolio losses.

3. Bank Fixed Deposits (Risk-Free, Stable)

FDs offer peace of mind. The returns are completely predictable, making them excellent for short-term goals (under 3 years) or emergency funds, but poor for building multi-decade retirement wealth.

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Designing a Balanced Portfolio

While equities typically generate the highest ending corpus, a smart financial plan does not put all eggs in one basket:

• Core Portfolio: 60% to 70% in equity mutual funds for long-term compounding.
• Stability Portfolio: 10% to 20% in physical gold or gold ETFs to buffer volatility.
• Liquidity Portfolio: 10% to 20% in high-yield FDs or debt funds for near-term cash needs.