Wealth Guide: Digital Gold Investment - Long-term portfolio, allocation, and more - Explained by expert

Gold for ages has been an integral part of Indian culture. People tend to invest in gold to make sure that their family’s future is secure. People in India have trusted gold since ages and gold has performed to stand strong with their trust. Gold has always proven its ability to be a hedge against inflation. Mahendra Luniya, CEO, Vighnaharta Gold Limited, shares his knowledge on why gold should be a part of long-term portfolio, how much should be the allocation towards gold in a portfolio, why digital gold instead of physical and advantages of digital gold:-

Explaining how much gold should an investor have in his portfolio, Mahendra Luniya, said, "A long-term portfolio should always have a major allocation towards equity, whereas one must also have a significant allocation towards Gold. One must have a minimum 7-15% allocation towards gold as it provides a cushion to the portfolio in adverse market situations. A long-term portfolio will face many adverse times and, in those tuff times, Gold's performance gives a down side protection to the portfolio."

Luniya adds, "As this investment in gold is for long-term one should consider holding it in Digital form like SGBs. Why SGBs?

1) High liquidity: - One can liquidate SGBs any time online. Whereas physical gold liquidation takes time.
2) No GST: - GST is not charged on SGBs whereas while buying physical 3% GST is charged. 
3) Interest: - Investor earns 2.5% p.a. on SGBs along with the possible price increase, hence this gives a regular inflow to the investor, making it even more attractive. 
4) Purity: - Purity of physical gold is a major concern whereas this is not a concern in SGB."

Advising on how can a long-term investor save money by choosing digital gold, he said, "If an investor does an SIP in physical gold for a longer term, he is paying 3% GST every month, this can be saved by investing in SGBs."

"Further he will also save the making charges, and also earn interest over the investment. SGBs are also tax free if held till maturity, making it all the more attractive,"  he concluded. 

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)