• 14 Aug , 2024
• Blog

How to Build a Balanced Gold Investment Portfolio?

"Don't put all your eggs in one basket." This age-old saying holds special significance when it comes to investing in gold. Diversification will protect you from market volatility. It will ensure stable returns on gold investments.

But do you know how to build a balanced gold portfolio and manage risk accordingly? We will walk you through the basics to plan and build your gold investment portfolio that goes with your risk tolerance and financial goals. Look, all types of investments come under a certain level of risk, so you cannot completely ignore risk, but you can always manage it.

In this blog, we will show you how to create a holistic gold investment plan with ETFs, mutual funds, physical gold, and digital gold investments. By the end, you'll have the golden touch needed to secure your financial future with confidence and peace of mind.

Let's open the golden door to investing and explore inside.

How Do You Balance a Gold Investment portfolio?

Gold is a popular investment choice for stability and potential profit. Whether you're new to investing or seeking some smart gold portfolio management tips, here's how to build a balanced gold portfolio:

Explore And Examine Types of Gold Investments

1. Physical Gold: This includes gold bars, coins, and jewelry. You buy it from dealers or mints and store it yourself or in a secure facility. It's tangible and can protect against inflation, but it requires safe storage and has higher transaction costs.
2. Digital Gold: You can buy digital gold online without handling the metal physically. Platforms like DigiGold let you buy and sell gold with a few clicks. It's convenient and has lower storage costs, but choose a trustworthy platform.
3. Gold ETFs (Exchange-Traded Funds): These are funds that trade on stock exchanges and track gold prices. You can buy shares without owning physical gold.
4. Gold Mining Stocks: These are shares in companies that mine and produce gold. Their value is linked to gold prices and company performance. They offer the potential for high returns but come with mining industry risks.

To build a balanced gold investment portfolio, consider mixing these options based on your goals, risk tolerance, and market knowledge. Start with safer choices like digital gold investment, then add riskier options as you gain experience.

Select the Right Gold Investment Plan

Selecting the right gold investment depends on your goals and convenience. 

Goals and Convenience

• Safety and Tangibility: Physical gold
• Easy Storage and good returns: Digital gold
• Higher Liquidity and returns: Gold ETFs
• High Risk, High Reward: Gold mining stocks and futures

The type of gold investment you choose affects the fees and upkeep needed. For example, physical gold may involve extra costs for safekeeping, whether you store it yourself or use vault storage services. On the other hand, digital gold doesn’t require any storage, so you can save on those costs.

The table below summarizes the minimum investment requirements for different gold investment types. This information will help you manage your gold portfolio.

Overall, digital gold is the best gold investment plan for small and large investors. Digital gold is easy to buy and sell online, and you don’t have to worry about storage. Physical gold is a tangible asset but involves additional costs like making charges, secure storage and insurance cost as well. On the other hand, Gold ETFs and mutual funds require a higher investment and involve market risks. 

So, whether you're a small or large investor,  digital gold offers a convenient and cost-effective way to invest in gold without the hassles of physical storage or market risks.

Pick The Right Allocation for Gold Investment

1. 5-10% Allocation

If you trust the economy's growth but want a safety net, allocate 5-10% of your portfolio to gold and gold-related assets. This provides insurance against unexpected downturns.

2. 15-25% Allocation

For those concerned about economic risks or potential inflation, consider a 15-25% allocation to gold. This higher percentage can offer more protection if you worry about financial instability.

3. 30-50% Allocation

If you believe the economy is in serious trouble, with rising debt and inflation, consider allocating 30-50% of your portfolio to gold. Beacuse gold can be a good hedge when the market is down.

Gold Investment Trends and Market Analysis

When investing in gold, gold market analysis and trends are important. Gold prices fluctuate based on various factors, such as economic conditions, geopolitical events, and market demand. Understanding these trends can help you make informed investment decisions.

Recently, in the 2024 budget announcement, the gold market experienced a significant shift.

Following the Budget announcement by Finance Minister Nirmala Sitharaman, which included a reduction in basic customs duties on gold and silver from 15% to 6%, gold prices saw a dramatic decrease. The price of gold crashed by Rs 3,350, falling to Rs 72,300 per 10 grams in the national capital.

This sharp drop shows how policy changes can affect gold prices. That’s why you have to stay informed about gold investment trends and government decisions.

Staying updated on these developments is crucial when creating a balanced gold investment portfolio.

Get Gold Smartly

Gold is a valuable asset with many benefits. When adding gold to your investment portfolio, consider your goals, risk tolerance, and other factors. 

If you are looking for a safe gold investment, digital gold is the best option for you. You can start investing with a very low amount, and there's no need to worry about storage. You can easily sell or take delivery of your gold whenever you want.

For digital gold investment, you can rely on DigiGold, India’s trusted platform.

With DigiGold, you can buy, sell, and store gold online at live market rates. The good part? You can start with as small as Rs 1. We also offer a No-locking period SIP in gold starting from Rs 500 through periodic installments.

Sounds interesting? Visit DigiGold today and start building your gold investment portfolio!