For decades, gold in the form of ornaments has been an inseparable part of Indian families—both as a symbol of tradition and a tangible store of value. But alongside its cultural charm lies a practical challenge: physical gold requires safe storage, often in lockers or at home, exposing it to risks of theft and added costs like insurance.
In today’s complex financial world, it’s time we rethink how gold fits into our investment journey—beyond just ornaments or coins. While equities have traditionally been preferred for wealth creation, the current market volatility calls for a more balanced approach. Gold can act as a stabilizer in your portfolio, offering both a hedge against inflation and a safety net during turbulent times.
Outperformance: Gold has outperformed equity across most time periods considered below with better return to risk ratio historically:
Over the past decade, gold has consistently outperformed many asset classes, delivering a 15% compounded annual return for Indian investors. Its resilience during crises—be it the global financial crunch, pandemic uncertainty, or geopolitical turmoil—makes it a compelling choice to complement equities without volatility to the portfolio.
For investors seeking a cost-effective, convenient and liquid exposure to gold, modern gold investment options like Gold Exchange Traded Funds (ETFs) and Gold ETF Fund of Funds (FoF’s) offer better alternatives.
Also read | Buying gold coin for Dhanteras? Here's what Amazon, Flipkart, and others are offering
Gold ETFs and Fund of Funds: Smarter ways to invest
Gold ETFs: Traded on stock exchanges, they mirror gold prices closely. Investing in Gold ETFs only requires a demat account to hold the units and a trading account to transact in them.
Gold ETF Fund of Funds (FoFs): Investors can also use the FoFs to add an exposure to gold in their portfolios. Typically, designed for retail investors who do not have a demat and trading account, investors can also invest through SIPs, STPs and obviously lumpsum transactions. Gold FoFs also eliminate operational hassles and provide a seamless access to investment in gold. Gone are the days of worrying about purity, making charges, or storage hassles. With these digital routes, you can own gold in an easy, transparent and cost-effective manner without any physical handling of the asset.
Gold: The Laxmi for your portfolio
As families perform Laxmi Pooja on Dhanteras, praying for prosperity, the case for including gold in your portfolio remains compelling. Whether through ETFs or FoF’s, gold not only protects wealth but may also enhance long-term returns while offering stability during market turbulence.
In today’s volatile investment landscape, gold continues to be the golden-edged ally of wealth creation, a timeless asset that bridges tradition with modern financial wisdom.
Invest wisely, invest in gold, the shining edge of your wealth creation journey.
The writer is Chief Investment Officer – Fixed Income, Baroda BNP Paribas Mutual Fund.
Disclaimer: The views expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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