Iyer suggests that while there is no one-size-fits-all approach, historical market trends over the past 25 years indicate that allocating 10 to 15% of your investment portfolio to gold is a sensible target.
“Gold should be viewed as a safety net—a ‘tail-end’ allocation rather than the core of your investment strategy,” Iyer advised, emphasising its role in safeguarding wealth rather than driving aggressive returns.
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Interestingly, many of us already hold a significant amount of “unknown gold” – things like jewellery and gold coins. While these have their own value, it’s often hard to keep a precise track of them. Considering this existing physical gold, limiting your financial portfolio allocation to around 15% seems sensible.
So, how can you invest in gold within your financial portfolio? There are two main routes:
Gold ETFs (Exchange Traded Funds): If you have a Demat account, Gold ETFs are a convenient option. They allow you to invest in gold in a paper form, much like stocks.
Gold Funds: For those without a Demat account, gold funds are available. These funds essentially invest in Gold ETFs, giving you indirect exposure to the price of gold.
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Both options provide a way to own gold without the hassles of physical storage.
A gradual and consistent approach to investing in gold has proven highly effective. Rather than fully divesting from gold, Iyer prefers to maintain it alongside equities and fixed-income assets within her portfolio. Viewing gold as a protective cover for her financial holdings, she advocates for a systematic investment plan (SIP) in gold funds to ensure consistent exposure while balancing overall investments.
For the entire discussion, watch the accompanying video
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(Edited by : Ajay Vaishnav)