BackHow much gold you should hold in your portfolio — explained
Portfolio management: Gold may give up to double digit return to its investors in long term, believe experts
PremiumPortfolio management: Saving money is not a concept that comes naturally to people - but adequate time taken to curate a budget after recognising their finances, organising the spending and managing debts, there is a massive possibility for them to achieve their long-term financial goals. However, to achieve one's short term to long term goals, experts often advise investors to have a diversified portfolio. While diversifying one's portfolio, people allocate funds to debt and equity on the basis of their risk appetite. However, when it comes to gold exposure, it becomes highly tricky as the investment has the ability to beat inflation and debt instruments in long term but it gives lesser return than equities.
Batting for a diversified portfolio, Palka Arora Chopra, Senior Vice President at MasterTrust said, "As it is rightly said, don’t put all your eggs in one basket, one must diversify their investments, around so that the exposure to any one type of asset is limited. It’s important to not be imprisoned by lifestyles, one can't afford and to spend wisely."
Advising investor to take gold investment seriously, Pankaj Mathpal, MD & CEO at Optima Money Managers said, "During asset allocation in portfolio management, it has been found that people look at equity and debt exposure on the basis of their risk appetite whereas they overlook gold, which is incorrect. He advised investors to take gold as an investment option and do proper allocation to gold in one's portfolio as well."
On how much gold exposure one should have in one's portfolio, Vinit Khandare, CEO and Founder at MyFundBazaar said, "Allocating 10-15% of one’s portfolio towards gold is inversely correlated with the stock market, giving stupendous returns during an economic slump - be it staggering one’s investment in Gold ETFs through a systematic investment plan or an SIP."
Vinit Khandare of MyFundBazaar went on to add that gold having being around for centuries has seen an upswing - from physical gold in the form of jewelry, coins and bars to digital gold in the form of god-based funds and ETFs - being the investor’s most preferred asset class.
"With a proper allocation towards the investment functioning as a hedge against geopolitical risks, it would be beneficial having gold in your portfolio for the long-term as compared to trade-in and trade-out of the investment," Vinit Khandare said.
Asked about the return one can expect from gold investment in long term, Pankaj Mathpal of Optima Money Managers said, "In long term, gold beats debt fund return and if one remain invested in gold for 15 years or more, it may expect to get at least double digit growth after 15 or more years of investment." Pankaj Mathpal also said that if an investors risk appetite is low then in that case he or she should keep gold exposure to the tune of 15 per cent whereas in case of high risk appetite, one should allocate 10 per cent of the portfolio to gold and allocate rest 5 per cent in equities as equities give around 15 per cent return after 15 or more years of time horizon.
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