You now have two rulers, one nominal and one real. You also have the idea of return as payment for waiting, inflation and doubt. Here's the historical record those tools measure.
Treat each figure in the table as an order-of-magnitude historical anchor. None of them is a promise. Long-run averages conceal brutal decades, and the future is under no obligation to resemble the sample. The figures are approximate as of mid-2026. Verify them against Damodaran's "Historical Returns on Stocks, Bonds and Bills: 1928–current" page, which is updated each January, the UBS Global Investment Returns Yearbook, RBI's Handbook of Statistics on the Indian Economy, and BSE/NSE index factsheets. Use the TRI, or total-return index, versions, which include dividends. Price-only indices understate equity returns by the ~1–1.5% dividend yield.
What are the long-run returns by asset class?
| Asset class | What you own | India: long-run nominal | US: long-run nominal | Rough real return (both) | Worst-case character |
|---|---|---|---|---|---|
| Equities | Residual ownership of businesses | ~13–16% (Sensex, 1979–2024; ~12% over recent 20y) | ~10% (S&P 500 total return, since 1926) | ~6–8% | −50%+ in a bad year; decade-long flat stretches |
| Government bonds | A loan to the sovereign | ~7–8% (10y G-sec era averages) | ~4.5–5% (10y Treasury, since 1928) | ~1–3% | inflation surprises; 2022's US bond index fell ~13% |
| Cash / deposits / T-bills | Short claims on banks/state | ~5.5–7.5% (bank FDs) | ~3.3% (T-bills, since 1928) | ~0–1.5% (India FDs often ~0 after tax) | guaranteed real erosion in inflationary years |
| Gold | A lump of metal — no cash flows | ~9–10% in INR (long sweeps; includes rupee depreciation) | ~8% in USD since 1971; near ~1% real over centuries | ~1–3% | 1980–2008: 28 years to regain its nominal peak |
| Real estate | Land/buildings + rental stream | ~7–9% price + 2–3.5% rental yield (city-specific) | ~4% price (Case-Shiller) + ~4–6% rent yield | ~1–3% + rent | illiquid; 5–8% round-trip costs; local busts |
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How do you read the table like an analyst?
Here's how to read the table like an analyst:
- Equities compound highest because they're the claim on business itself, and because their path is the most violent, which is why the premium exists. The Sensex went from base 100 in 1979 to ~80,000 in 2024, a nominal price CAGR of ≈ 16%. Indian inflation averaged ~7% over much of that sweep, though, so the real story is nearer 8%, and it included 2008's −52% and 2009's +81% (check levels and episodes against BSE factsheets).
- Bonds are the inflation-vulnerable middle. A surprise inflation ruins fixed nominal coupons above all else, and the 2022 US episode was the textbook case.
- Cash is short-horizon safety and a long-horizon leak. After the tax arithmetic above, Indian FDs at typical slabs have historically hovered near zero real. Cash's job is optionality and survival. Growth has to come from somewhere else.
- Gold is an anti-currency, and it doesn't compound. It produces nothing, so its return is other people's fear of paper money plus, for Indian holders, rupee depreciation. Over long stretches the INR/USD leg adds ~3–4%/yr to gold's USD return. Gold shines in crises and inflation scares and can then sleep for a generation, as it did for 28 years under its 1980 peak. The starting point dominates its measured "return". Start in 1971, just after the gold peg ended, and it looks flattering. Start in 1980 and it looks damning.
- Real estate is a business with a bad ledger: rent yield plus price growth, minus repairs, taxes, vacancy and enormous transaction costs. Work it through properly, as the practice-set cousin of the worked example on direct vs regular mutual fund plans does, and the "my uncle's flat quadrupled" story usually comes out at ~7% nominal, ~2% real, plus rent, minus headaches. Its true edges are leverage and the enforced patience of illiquidity, since you can't panic-sell at 2 a.m.
What are the limits of these historical returns?
Two disclaimers belong to the content itself. First, these are teaching anchors. The programme teaches analysis and stays out of allocation, and nothing here is advice to buy any of these. Second, the ranges above are arithmetic memories of one particular century. Survivorship matters, because the US was history's winning market. So do regime changes and starting valuations, and Phase 6 will teach you to distrust extrapolation just when it feels safest.