Aren’t you trapped in the rise of gold and silver? Know what veteran fund managers say!
There is always a tug of war going on between the stock market and the commodity market (gold and silver). In recent times we have seen that silver prices have increased by almost 300% in a year and gold has also doubled. In such a situation, the inclination of common investors towards gold ETFs and silver funds has increased rapidly. But is it right to invest at this stage?
1. How much is the right investment in gold and silver?
Big fund managers around the world believe that gold should have 10% to 15% share in your total portfolio. In special circumstances it can be taken up to 20%. But when prices are already skyrocketing, devoting a large portion of the portfolio to bullion can be risky. This can disturb the balance of your entire portfolio and long-term returns.
Read full article
2. Avoid FOMO and stay alert
When an asset class continues to rise, small investors start pouring money into it out of fear that they might be left behind. This is called ‘FOMO’. But the reality is that gold and silver are currently in the ‘overbought zone’. Experts say that the investment in something which has been going on for a long time should be gradually reduced and not increased.
3. Opportunities are hidden in midcap and smallcap
On one hand, gold is shining, while on the other hand, a lot of decline (beating) is being seen in mid-cap and small-cap stocks. Ordinary investors are panicking and pulling money out of equities, but the real rule of investing is this: “When everyone else is scared, be greedy.”
In equity markets where confidence is low and prices are at their lowest, the prospects for recovery and future returns are at their highest. The good companies that are beating today will form the basis of your portfolio in the long run.
4. What does the equity-to-gold ratio say?
If we look at the Equity to Gold/Silver Ratio, the current figures seem to be in favor of the equity market. This means that investing in shares can be more profitable in the future than gold and silver. Therefore, it would be wise that instead of investing your money in expensive gold, you gradually shift your money to good quality midcap and smallcap companies.
‘Build’ your portfolio in such a way that ‘down’ assets get a place in it, because the future rally will start from there. Remember, in the long term, only that portfolio works which is rebalanced at the right place at the right time.
related news
end of article
