Invest only as a hedge and limit your exposure
18-Jul-2012 •Research Desk
I want to buy gold worth Rs 60,000. Should I invest lump sum at current prices or start an SIP in a gold ETF?
At the current price one will be apprehensive about investing in gold. Moreover, we strongly believe that one should invest in gold only when one already has a well diversified portfolio and is looking to invest in gold as a hedge and that too not more than 5-10 per cent of the portfolio. You can invest in gold ETFs, but you will need a demat account to buy and sell the units which cannot be bought through regular SIPs. You can consider investing in gold funds, which are passively managed fund of funds that invest in the open-ended gold ETFs, which in turn invests in physical gold with 99.5 per cent purity. This structure is convenient for those who do not have a demat account and want to start a systematic investment plan in gold. Other than lump sum and SIP, you may also consider investing in gold funds over a period of time.