Invest in gold for portfolio diversification!

By | April 29, 2011

With the slight fall in the gold prices, you as an investor, can generate good returns in the future, if you can allot certain funds for investing in Gold.

Although these investments are preferred in their non-physical form such as Gold ETFs, Gold fund etc. Since the safety and security of physical gold can create certain amount of tension, investing in gold in a paper format if much desirable.

Investing in gold should be looked upon as further diversification in your portfolio and not be undertaken in the initial stage of structuring your portfolio. Moreover, it is best invested at the time you are devoid of any debts of repayment of a home loan, personal loan etc. There is no point of continuing such a debt when you have the right amount of assets to help you prepay it and reduce the burden off your funds.

Apart from the above fact, it is equally important to ensure that you holdings pertaining to this asset should not exceed more than 5% of your total investment. This is because in case of a downfall, you do not lose out a major chunk of your investments.

If you are looking forward towards investing in an ETF, it is important to analyze the exit load charges and various other recurring expenses that you might incur at the time you exit the fund. Only if your fund value at maturity, after deducting all charges, is worth the effort spent in investing, you can consider having this asset in your portfolio.

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