InvestorQ : Is it correct to assume that you need to have a portion of your portfolio invested in gold?
Arti Chavan made post

Is it correct to assume that you need to have a portion of your portfolio invested in gold?

Answer
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Aditi Sharma answered.
1 year ago


One can safely assume that it is actually risky not to have gold in your portfolio. Firstly, gold does not move in tandem with equities or debt and hence it helps you diversify your overall investment portfolio. Secondly, gold is a natural hedge against inflation. This will ensure that over a longer period of time, its real returns become quite competitive. Thirdly, unlike equities and mutual funds, in case of gold there is no invisible asset. The asset is tangible, standardized and measurable. By not including gold in your portfolio you lose out on these three key advantages. The crux of the gold argument is that is not possible to outperform by buying gold as there is no scope for outperformance within the asset class. However, allocating 7-10% of your portfolio to gold will give it greater stability and soundness. Purely from the point of view of diversification and the perspective of shielding your portfolio in tough times, gold has a key role to play in your portfolio. In a nutshell, as the world enters turbulent times, you may actually be taking a big risk by not including gold in your portfolio. It is time to give your portfolio that gilt edge.