How much gold should you hold? Kotak’s Lakshmi Iyer weighs in

As gold prices continue to surge, investors are questioning whether they should increase their exposure to the precious metal. According to Lakshmi Iyer, CEO-Investment & Strategy at Kotak Alternate Asset Managers, having a portion of your portfolio in gold can offer crucial protection during uncertain times.

Iyer suggests that while there is no one-size-fits-all approach, historical market trends over the past 25 years indicate that allocating 10 to 15% of your investment portfolio to gold is a sensible target.

“Gold should be viewed as a safety net—a ‘tail-end’ allocation rather than the core of your investment strategy,” Iyer advised, emphasising its role in safeguarding wealth rather than driving aggressive returns.

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Interestingly, many of us already hold a significant amount of “unknown gold” – things like jewellery and gold coins. While these have their own value, it’s often hard to keep a precise track of them. Considering this existing physical gold, limiting your financial portfolio allocation to around 15% seems sensible.

So, how can you invest in gold within your financial portfolio? There are two main routes:

Gold ETFs (Exchange Traded Funds): If you have a Demat account, Gold ETFs are a convenient option. They allow you to invest in gold in a paper form, much like stocks.

Gold Funds: For those without a Demat account, gold funds are available. These funds essentially invest in Gold ETFs, giving you indirect exposure to the price of gold.

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Both options provide a way to own gold without the hassles of physical storage.

A gradual and consistent approach to investing in gold has proven highly effective. Rather than fully divesting from gold, Iyer prefers to maintain it alongside equities and fixed-income assets within her portfolio. Viewing gold as a protective cover for her financial holdings, she advocates for a systematic investment plan (SIP) in gold funds to ensure consistent exposure while balancing overall investments.

For the entire discussion, watch the accompanying video

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