Gold is always a safe option for investors and there have been lots of positives about investment in gold but do all those hold true in the current scenario? What should be your ideal allocation to gold? What are the major factor that attracts investment in gold? What would you opt for if you have an investment option as good as gold? Let me answer all these questions.
Gold is always considered to be a safe option for investors. The yellow metal has given a lump sum profits in the past 4 years. Year 2008 witnessed a sudden revolution in the gold prices owing to the economic recession. On an average, the metal has given around 15% returns in the past 2 years and even more returns in the year 2008 and 2009. There have been lots of positives about investment in gold. However, all these information do not hold true in the current scenario. If you are trying to allocate more funds to your existing gold investments, it is time to sit back and think.
First Time Investor
If you are investing in gold for the first time, then you need not wait for anything. You can straight away make investments in gold either through physical form or gold ETF. ( Check out my articles on Best Gold ETF’s ) Gold is still a safer fund when compared to other funds in the market. However, that does not mean you can put 100% of your money in Gold funds.
Ideal Allocation in Gold
It is highly recommended for the first time investors to invest in gold. It is recommended to diversify a maximum of 15% of your funds towards gold accumulation and not more than that. Gold investments are purely meant to have a proper diversification of your funds. There are several other funds, which can give better returns in the existing scenario. If you plan to pull out all the funds from equity, debt and mutual funds to invest in gold, then it might prove to be an expensive mistake in the long run.
3 Reasons To Invest In Gold
The yellow metal still shines bright. Expecting the Eurozone crisis and the US fiscal cliff, people are ready to make fresh investments in Gold. If you would like to invest a minimal amount in gold, there are several reasons to do so.
- Gold investment acts as a good diversification fund. When all other funds fail to perform, gold can contribute solid returns to your financial kitty.
- It acts as a better tool to hedge against the inflation and to deal with uncertainties in the economy.
- Third and final reason is that gold prices seldom come down or at least will remain in its existing price in the long run. Even if the prices come down, they will move up the ladder as fast as possible and will recover the loss. It will definitely not bite your fingers and pocket like equity.
Alternative Investment Option as Good as Gold
Silver funds are expected to give better returns in the year 2013. Silver as a commodity has a strong demand from industries too. The prices did not rally too much for the silver in the past couple of years compared to Gold. Hence, an upbeat demand from industries for the commodity is expected to trigger a fresh rally in silver prices. Now you have an option to diversify your funds to Silver ETFs too.
So finally the question to you is do you think it is right time to invest more in gold or you prefer Silver over Gold? Share your views in comments below.