Are you tempt about Gold ?
Now a days, when I meet any my
friends, clients they all asked one common question what is your view on gold
price. Some of them talk about investing in gold is the best option as per
today’ situation for long term and some tempt for short term trade and want to
reap benefit of short term trading. People invest in gold for a many reason.
The reason may be hedge against inflation, political crisis, the risk of stock
market crash and many more. In our country people invest in it for child’s
marriage and transfer it to next generation and almost every household have
some quantity of gold. Investing in physical gold is top choice of the people.
But in current financial planning terms the question is how much percentage you
should allocate to gold. The answers are quite interesting range within 5% to
45%. Yes, believe me some investor or financial advisor advice even more than
45% allocation of gold.
So in my understanding one should
understand clearly what kind of investor you are before trying your hand in
gold investment or speculation. Because there are different types of participant
in gold market and a plenty of options available like ETF gold, Gold Mutual
Fund, Gold trade in National Spot Exchange and many more. Earlier we had only
limited options like physical gold in terms of coin, bar, jewellery. There are
also Future and option trading also available in exchanges. As an investor be
clear your category whether you need to trade in future and option gold or only
invest in coin, bar or paper gold. There are different set of expenses in very investing
mode. So it is very important to understand the cost of investing and fix the
investment horizon also.
Do you proper homework on all the
available mode of gold. Do not fully dependent on your broker. There are very
useful websites are available with useful information and tips. If your horizon
is long term investment then go with National Spot exchange and if you want
trade for short term gain / loss go with MCX (Multi Commodity Exchange).
Understanding the movement of
gold is very important t o get success. Gold is used not only as a commodity
but also as a currency. So there are many factors to affect the price of gold
as it is associated with global events. There are also risk of loose money in
short term trade so it is better to understand those risk also. In point of
view trading , I advise keep book you small profit and never forget stop loss
otherwise the chances of losing money is more. Never compare other’s return
with your return. Be happy whatever profit you have booked. In trading both are
possible you can earn money and you can lost money also.
As you may have different
opinion from mine but in my opinion keep away from trading and invest 20 % maximum
of your investment portfolio as it is hedging instrument not a good return
asset for long term. There are not much gain in speculating of bullion
commodity.
If you have any query regarding investment please feel free
to ask.
Regards,
Arvind Trivedi
Certified Financial Planner
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