Traditionally my family has invested in Gold. Why not to invest just in Gold?

If you would have invested in Gold and Sensex in 1980, by 2016 you would have generated an annualized return of 9.7% on Gold and 15.8% on Sensex. Gold has been a defacto investment option for many families in India. Do the returns mentioned above imply that there is no place for Gold in an individual’s portfolio? The second graph points to the importance of Gold in an individual’s portfolio. During the periods of under performance of the Sensex during 1987, the dot-com bust (2001), the mortgage crisis(2008) and 2011, Gold has generated positive returns acting as a store of value during period of heightened uncertainty. It is recommended that Gold can account for 5% to 15% of an individual’s portfolio to act as a hedge during period of global uncertainty. However, the practice of putting all your savings in Gold may negatively impact the value of your wealth over a longer time horizon.

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