Sensex VS Gold: both took 21 years to reach 50 thousand, know where the highest return was received

21 years ago, in 1999, gold and Sensex were almost at the same level.

Even after 21 years from 1999, the gold rate and Sensex levels are almost the same. But, the Sensex proved to be more beneficial for investors in such a long period. However, in the short term, the Sensex and gold have given almost the same returns.

January 28, 2021, 5:49 AM IST

new Delhi. Gold or Sensex – Where will you get the best returns in the long term? In the short term, both are getting almost equal returns. About 21 years ago, both Sensex and Gold were at the same level and even now both are trading at almost the same level. In 1999, the price of gold was Rs 4,234 per 10 grams. At the same time, BSE Sensex was at the level of 4,141 points. Now, even after 21 years, both of them are seen trading at almost the same level. Gold prices have increased by 12 times to Rs 49,659 per 10 grams during this period. On the other hand, the Sensex has also risen nearly 12 times to around 49,000.

But, during these 21 years, the Sensex has given a return of about 50 percent more than gold in terms of returns. The main reason for this is that the real return of the SENSEX is not based on the Price Returns Index (PRI). Rather it is based on the Total Returns Index (TRI). Only information about capital increase is available through PRI. Whereas, in addition to capital increase in TRI, information about dividend, interest and capital gains is available.

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How Sensex was more than 50 times more profitableIn the last 21 years, the Sensex and Nifty have risen from 4,100 – 4,200 to near 50,000. The SRI’s TRI has increased from 4,356 as on June 30, 1999 to over 72,200 at present. It has increased about 17 times. SENSEX’s TRI has grown at a CAGR of 14.31 per cent. Now it is 22,500 i.e. about 45 percent more than gold.

Why is TRI important to know the actual returns?
TRI not only gives information about the growth in the index due to any stock, but also about the dividend that is received on this stock. Investors investing in an index stock should know the returns of that index. Only then can you get information about the actual returns of that index.

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Experts also say that to know information about returns between different asset classes, only through the returns index, accurate information about actual returns can be collected. This is also considered to be the best way to find equity returns, because it includes dividends in addition to capital increase.