Gold Should Be a Support Asset, Not the Entire Portfolio: Experts
The sharp rise in gold prices has surprised investors across the country. While early investors have enjoyed strong returns, those waiting for a correction are now left disappointed. Amid this trend, financial experts stress an important question - how much gold should actually be part of an investment portfolio?
According to experts, maintaining around 5% to 15% of a portfolio in gold is considered ideal for balanced investing.
The Central Government’s recent tightening of rules on gold and silver imports and investments has also increased discussions around safe gold allocation strategies. Experts continue to advise investors to diversify their portfolios instead of depending on a single asset class.
During recent geopolitical tensions, portfolios heavily dependent on equities faced significant pressure. However, investors who included gold in their portfolios experienced better stability. Even though gold has delivered strong returns in recent years, experts caution against allocating excessive amounts to the precious metal.
The ideal level of gold investment depends on factors such as risk appetite, financial goals, investment horizon, and overall asset allocation.
Why Balance Matters
If gold allocation is too low, it may not provide sufficient protection during market uncertainty. On the other hand, allocating too much to gold could reduce exposure to higher-growth assets such as equities and businesses.
Experts point out that gold offers financial security during uncertain periods, but it is not a long-term growth engine like stocks, businesses, or real estate, which can generate regular income and wealth creation over time.
Best Gold Investment Options
Investors can choose from several gold investment options, including:
- Gold jewellery
- Gold bars and coins
- Gold ETFs
- Digital gold
- Sovereign Gold Bonds
Each option has its own advantages and risks, making careful evaluation important before investing.
Gold as a Hedge
Experts describe gold primarily as a hedge against inflation and economic uncertainty rather than a primary growth asset. Gold often performs differently from equities during market crashes, high inflation, or currency crises, helping diversify and stabilize investment portfolios.
