Expert Tips on How Much of Your Portfolio Should Be in Gold?

We all know that investing in gold is very essential as it’s timeless, reliable, and is a great diversifier. But when it comes to actually investing, one question always pops up in our head is “How much should I invest in gold?” Should it be all my money, or just a part of my investment portfolio?

The truth is, while gold is an essential part of any investment strategy, it’s crucial to strike the right balance. Too much gold can limit your portfolio’s growth, and too little might leave your investment portfolio unprotected during inflation or market downturns. In this blog, we’ll answer this important question and show you the ideal way to include gold in your portfolio & gold investment strategies.

Why gold as an asset class is required in your investment portfolio?

Gold is often considered a safe-haven asset, serving as a hedge against inflation and economic uncertainties. Additionally, Gold is a great diversifier and adds a good store of value to the portfolio.

How much should you invest in gold?

Ideally, one can allocate 5-10% of their portfolio towards Gold Investments. However, this can always be customized based on your goals, risk appetite, etc. This range allows you to optimize your portfolio, providing exposure to gold’s benefits. 

Let’s look at an example:

Sonia is 30 years old and wants to invest ₹1000 every month, let’s see how she can diversify her money between 3 important asset classes like Equity, Debt and Gold.

By using the 100 – Age thumb rule, (where 100 – Age = Percentage of Equity in your investments), 5-10% in Gold and the rest in Debt.

Equity investment = 100 – 30 = 70%. Therefore, 70%  of ₹1000 = ₹700 she could invest in equity.

Gold investment = She decides to invest 10% of  ₹1000 i.e ₹100 in Gold.

Debt investment = ₹1000 – (investment in Equity + Gold) i.e ₹1000 – ₹800(₹700 +₹100) = ₹200, is what she decides to invest in Debt.

This is how, with just ₹1000, Sonia diversified her portfolio into Gold, Equity, and Debt, and she could access all these Asset Classes through Mutual Funds, making Investing simple and accessible. This is one of the gold investment strategy.

Check out Lxme’s ₹100 Gold, Equity, and Debt Fund and start your investments with just ₹100!!

What are the smart ways of investing in Gold?

Gold Mutual Funds: 

Gold Mutual Funds are mutual funds that invest in gold and different gold-related assets including Gold ETFs.

Features:

• They are professionally managed funds that invest in gold assets on your behalf.
• Gold Mutual funds invest in Gold ETFs and in turn, Gold ETFs invest in physical gold. 
• They are bought from a fund house and you can invest with just Rs.100.

Check out Lxme’s well-researched and expert-curated gold mutual fund portfolio. You can also invest in mutual funds like equity and debt through the Lxme app.

Gold ETFs: 

Gold ETFs (Exchange Traded Funds) are passively managed funds that provide a way to invest in gold without physically storing the gold bought. 

Features:

• They invest in gold of 99.5% purity and one unit of gold ETF is equal to one gram of gold. Minimum Investment amount is 1 unit. 
• For every unit of gold ETF sold, the fund house stores an equivalent amount of physical gold
• They are traded on the stock exchange and their value is tied to the price of physical gold.  

(Note – There are also Digital Gold Plans available in the market where you can buy gold for as little as ₹1/-, but remember Digital Gold Plan does not come under the purview of any financial regulator therefore, one needs to select the platform carefully)

These are the gold investment strategies and for generations, gold has been a trusted way to save and protect wealth, and it continues to be a smart choice for today’s women. Investing in gold brings peace of mind knowing your money is protected against inflation. 

Also, we have a fun and easy way to save in gold through Lxme’s Golden Girl Savings Challenge where you can save ₹50K in just 120 days. Click here to know more about the challenge.

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