Gold is in the news nowadays. I thought it's a good time to dredge up this series of articles on Gold that I posted in my blog at the end of 2010.
In the last fifteen years since I wrote that, Nifty is up about 3.5 times and gold is up about 5 times.
Nothing much has changed in terms of the premises on which I was recommending gold then. I would still recommend gold as part of your portfolio, except that I would change the recommended allocation, from 10 to 15 percent of your total investment portfolio earlier, to one third of your non-real estate investment portfolio.
As to silver, well, I think I am changing my mind on that. When you have gold in your portfolio, why do you need silver? It is more volatile without necessarily having more potential for upside. It is both a precious metal and a commodity, and both the precious metal market dynamics and commodity market dynamics have an influence on silver. Also, it seems to be going nowhere and no one really is talking about it, it's like some poor neglected cousin of a rich family!
I am getting more and more inclined to look at only gold and not silver.
"But, gold has gone up so much, it is at a high, should I invest now?", will be the natural question that arises.
There is no such thing as too high, too low, the exactly right time, or timing the market. Just do it!
In the midst of a stock market boom, everyone wants to pile on to stocks. In the midst of gloom and doom everyone wants to sell. There is a humongous amount of time spent discussing stocks, worrying about stocks, exhilarating over stocks and wailing over stocks. If you invest in gold instead, all that wasted energy can be used elsewhere! In the last fifteen years, gold has significantly outperformed stocks.
Will the same be the case in the next fifteen years? No one knows, least of all the talking heads on TV who you waste time listening to, along with wasting time watching IPL matches. You can save all that time for watching more wasteful IPL matches if you don't invest in stocks and put your money in gold instead!
But yes, coming back to your investment strategy, the best long term investment strategy is to be diversified across the four Asset Classes of gold, real estate, equity and debt. And stop worrying about the outcome, karmanye vaadhikaaraste and all that, you can only do your duty and leave the rest in the hands of God.
So stop suffering from FOMO since you don't have any gold in your portfolio. And start investing in gold also.
But, you say, it has already gone up so much, what will happen...
I know, I know. Life is incredibly complex, what to do...
( Posted to my blog: https://www.dineshgopalan.com )
No comments:
Post a Comment