Given the market conditions, is buying gold a good investment?
Obviously, gold is a good investment and helpful to diversify your portfolio. However, it depends on what you are expecting from it.
Currently, I have around 20% gold in my portfolio. I do not expect a huge return from gold. I prefer gold for safeguarding my returns during any uncertain stock market conditions.
When markets decline or inflation spikes, this precious metal typically rises. Now, if you want to know how much portion is suitable for you, you can follow the simple formula below for gold investment:
- If I am confident about the country’s growth but want some protection, I allocate 5-10% of my portfolio to gold and its related assets.
- In case I am moderately sceptical about economic stability or foresee rising risks, I choose a 15-25% allocation for a stronger safety net.
- If I sense high economic instability and worry about inflation or currency collapse, I might put 30-50% of my portfolio into gold as a defensive shield.
I am sharing a table below to help you understand different ways of gold investment:
| Type | Features |
|---|---|
| Physical Gold | Tangible asset, but it requires safe storage and insurance. |
| Digital Gold | You can invest online with as low as ₹1 or ₹10. |
| Gold ETFs | You can trade this on the stock exchange at a low cost and it has high liquidity. |
| Gold Mutual Funds | Gold mutuals invest in gold and related assets and have slightly higher fees than ETFs. |