Gold Investment: As the month of April marks the beginning of a new financial year and a traditional time for fresh investments, market experts are advising investors to reassess their portfolios and rethink how they approach gold investing. While gold continues to hold strong cultural and emotional value in India, financial experts are increasingly highlighting a shift toward regulated instruments such as Gold ETFs and Gold Fund of Funds over physical gold.
Speaking with Zee Business, Moneyfront CEO Mohit Gang and Complete Circle Capital Senior Partner Vikas Puri discussed not only gold investing, but also broader portfolio strategy, asset allocation, and the importance of discipline in long-term wealth creation.
Gold remains culturally significant, but investment approach is evolving
Mohit Gang emphasised that gold has been an integral part of Indian households for generations and continues to be associated with cultural traditions, festivals, and long-term savings.
“Indian households have accumulated gold over decades in jewellery, coins, and bars. It has made families wealthy in a hidden way over time,” Gang said, pointing to its deep-rooted presence in Indian financial behaviour.
However, he noted that while physical gold continues to be popular during festivals like Gudi Padwa and Akshaya Tritiya, it comes with practical limitations that investors must consider more seriously today.
Challenges with physical gold investing
According to Gang, physical gold is not always the most efficient form of investment due to multiple structural costs and constraints. He highlighted several issues that reduce its attractiveness from a pure investment perspective.
- Making charges that can reduce value by around 8–10 per cent
- GST applied on purchase
- Storage and locker costs
- Security and liquidity concerns
He added that these factors collectively make physical gold less efficient compared to financial alternatives.
“Because of making charges, GST, and storage issues, physical gold involves multiple layers of cost and inconvenience,” he explained.
Gold ETFs and Gold Funds emerge as preferred alternatives
Gang strongly recommended regulated financial instruments such as Gold ETFs and Gold Fund of Funds as better alternatives for modern investors.
He explained that these instruments remove many of the inefficiencies associated with physical gold while maintaining exposure to gold price movements.
“Today, the best regulated and simple options are Gold ETFs or Gold Funds. ETFs are bought on exchanges, while fund of funds are accessed through mutual funds,” he said.
Why Gold ETFs and Gold Funds are preferred alternatives?
Gang further highlighted key advantages of these instruments:
- High liquidity
- Transparent pricing linked to market value
- No loss due to making or storage costs
- Ability to invest through SIPs
- Easy entry and exit at market prices
Gang also pointed out that these instruments allow investors to convert their holdings into liquidity whenever needed, without the friction associated with physical gold.
However, he advised caution regarding digital gold, stating that it is less regulated and has raised questions from regulators, including SEBI, in the past.
Gold as a strategic portfolio asset
Beyond investment formats, Gang stressed that gold should be seen as a strategic asset class rather than just a festive purchase.
He suggested that investors should maintain a structured allocation to commodities, including gold, as part of a diversified portfolio.
“An allocation of around 10 to 20 per cent to commodities, including gold, should be part of a balanced portfolio,” he said.
He also referred to long-term returns, noting that gold has delivered stable performance over time, with approximately 10 per cent long-term rolling returns and strong recent CAGR performance in certain periods.
Gold’s role in diversification and rebalancing strategy
Complete Circle Capital Senior Partner Vikas Puri added that gold plays an important stabilising role in diversified portfolios, especially during volatile market cycles.
He emphasised that investors should not only invest but also periodically review and rebalance their portfolios based on market movements.
“If equity grows too much or debt becomes overweight due to market changes, your allocation shifts away from your original plan. Rebalancing is necessary to bring it back in line,” Puri explained.
He highlighted that investors often overlook this step, leading to unintended risk exposure over time.
Broader portfolio discipline and long-term approach
While discussing gold, both experts also reinforced the importance of discipline in investing. They emphasised that long-term investing, systematic investing behaviour, and patience are more important than trying to time markets.
Puri highlighted that missing even a few of the best market days can significantly reduce long-term returns, reinforcing the importance of staying invested consistently.
He also pointed out that SIP-based investing and disciplined allocation decisions help investors benefit from compounding over time.
Experts agreed that while physical gold continues to hold strong cultural relevance in India, especially during festivals like Gudi Padwa, modern investors are increasingly better served by regulated financial instruments such as Gold ETFs and Gold Fund of Funds.
With benefits like liquidity, transparency, and cost efficiency, these instruments are becoming the preferred choice for gold exposure in a disciplined, long-term investment strategy. At the same time, maintaining proper asset allocation, periodic rebalancing, and a patient investment approach remain essential principles for building sustainable wealth over time.
