Understanding inflation is only the first step. The next step is learning about the different asset types that can help preserve and grow wealth over time. Each asset class has unique characteristics, levels of risk, and return potential. A well-diversified portfolio often combines multiple asset types to balance risk and reward.
| Asset Type | Description | Risk Level | Potential Return | Typical Purpose |
|---|---|---|---|---|
| Cash & Cash Equivalents | Savings accounts, fixed deposits, money market funds, treasury bills | Low | Low | Liquidity, emergency funds |
| Bonds (Fixed Income) | Loans made to governments or companies in exchange for interest payments | Low to Medium | Low to Medium | Income generation and capital preservation |
| Equities (Stocks) | Ownership shares in publicly listed companies | Medium to High | Medium to High | Long-term capital growth |
| Real Estate | Residential, commercial, or industrial property investments | Medium | Medium to High | Income and inflation protection |
| Commodities | Physical assets such as gold, silver, oil, and agricultural products | Medium to High | Variable | Inflation hedge and diversification |
| Alternative Investments | Private equity, hedge funds, venture capital, infrastructure, collectibles | High | High | Portfolio diversification and return enhancement |
| Digital Assets | Cryptocurrencies and blockchain-based assets | Very High | Very High | Speculative growth and innovation exposure |
No single asset type is ideal in every economic environment. Successful investing often involves diversifying across multiple asset classes to reduce risk and improve the consistency of long-term returns. The appropriate asset mix depends on an individual's financial goals, investment horizon, and risk tolerance.
All returns are based on 10 year rolling returns*.
| Asset | Median (50th Percentile) | 2.5th Percentile | 97.5th Percentile | Maximum Drawdown (days) |
|---|---|---|---|---|
| Indian Equities: Nifty TRI (Total Returns Index) | 13.86 | 7.56 | 20.79 | 1386 |
| Indian Equities: Nifty 100 TRI | 13.45 | 7.89 | 21.43 | 999 |
| Indian Equities: Nifty Midcap 150 TRI | 16.92 | 9.56 | 22.43 | 2322 |
| Indian Equities: Nifty Smallcap 250 TRI | 14.64 | 5.22 | 20.69 | 2345 |
| Commodities: Gold (ETF) | 8.14 | 4.02 | 16.87 | 2165 |
| Fixed Income: Liquid Fund (Fund) | 7.54 | 6.05 | 8.2 | - |
| Fixed Income: Ultra Short to Short Term Fund (Fund) | 8.2 | 7.09 | 8.74 | - |
| Fixed Income: Short Term Fund (Fund) | 8.13 | 7.25 | 9.14 | - |
| Fixed Income: India GSEC 5 Year Index | 8.07 | 6.18 | 9.16 | 235 |
| Fixed Income: India GSEC 10 Year Index | 6.63 | 5.85 | 7.48 | 508 |
| Global Equities: SNP500 PRI (Price Returns Index)** | 5.88 | -3.63 | 13.87 | 2464 |
| Global Equities: DAX PRI** | 6.92 | -1.88 | 10.85 | 2646 |
| Global Equities: FTSE PRI** | 2.3 | 0.33 | 5.82 | 2191 |
| Global Equities: CAC 40 PRI** | 2.02 | -5.07 | 7.74 | 7669 |
| Global Equities: Nikkei 225 PRI** | 4.82 | -6.21 | 13.04 | 5537 |
*Please verify the data quoted on your own. For some assets where I do not have index data, example for Gold, Liquid Fund, Ultra Short To Short Term Fund, Short Term Fund, I have used a mutual fund with history available from amfi. Fund which has maximum history downloaded from amfi is typically used. If you are aware of a better fund with more history please drop a comment and I will try to use that. I am not endorsing any particular mutual fund or etf for a category, do your own independent research.
**These are price returns and do not include dividend reinvestment so actual returns will be higher. Also foreign equities are in local currency and not in INR.
Published Oct. 7, 2026, 12:20 p.m..