Dhanteras is a traditional time to buy gold and silver, but experts suggest keeping these metals as a small part of your portfolio. Akshat Garg said, “For a ₹10 lakh portfolio, I would put ₹6.5 lakh in equities, ₹2.75 lakh in bonds and ₹75,000 in gold and silver.”
Dhanteras is the festival of lights and celebrations. It is traditionally associated with buying gold and silver, but precious metals can also serve a broader, more profound objective in an investment portfolio.
Beyond their festive appeal, precious metals can also provide investors with an opportunity to diversify and serve as a hedge against market uncertainty and geopolitical risks, such as the US-Iran war. Still, deciding how much to invest requires balancing financial goals, risk appetite, understanding of investment and exposure to other asset classes.
How much gold and silver should you hold?
Akshat Garg, Head – Research & Product, Choice Wealth, has recommended that aspiring investors keep precious metal exposure measured rather than allowing it to dominate the portfolio. He has explained this with a simple example.
“For a ₹10 lakh portfolio, I would put ₹6.5 lakh in equities, ₹2.75 lakh in bonds and ₹75,000 in gold and silver,” he said.
He has advised individuals aiming to build an investment portfolio this Dhanteras and Diwali to limit precious-metal exposure to about 5-10% of the total portfolio size, with a large allocation to gold. He suggested splitting the ₹75,000 investment between gold and silver, in the ratio of ₹50,000 in gold and ₹25,000 in silver. He also believes that an investor should consider making these investments through exchange-traded funds (ETFs) or funds of funds, and spreading purchases over time.
According to Samit Guha, Managing Director & CEO, MMTC-PAMP, investors can consider allocating around 10–15% of their portfolio to gold and silver, depending on their financial goals, risk appetite and investment horizon. Guha believes that precious metals can play an important role in portfolio diversification and long-term savings.
On the strategy of investing in precious metals, he explained, “Rather than making large purchases at once, investors can adopt a staggered approach to build their holdings across different price points. They can also choose between physical gold and silver in the form of coins and bars, or digital gold and silver for smaller, more frequent purchases.”
Gold or silver: What should investors consider?
Garg is of the opinion that gold is the core precious metal holding. According to him, this is due to its strategic role and significance as a portfolio hedge. Silver, on the other hand, has industrial uses and significance, making its prices more sensitive to economic conditions and market movements.
He has also warned against chasing recent price movements, emphasising the importance of staying diversified across equities, fixed income and precious metals. Garg has suggested allocating about 5-10% to precious metals, while Guha has advised a 10-15% allocation of the portfolio towards gold and silver.
Dhanteras can be an opportune time to begin investing in precious metals or to strengthen existing holdings. However, aspiring investors should ensure they plan well in advance, prioritise prudent allocation of capital, stagger their purchases objectively, and avoid concentrating their savings in gold and silver. A well-planned, balanced portfolio, rather than a large, emotion-driven festive purchase, can support long-term wealth creation.