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Should you include Gold in your portfolio

Should you include Gold in your portfolio?

The current decline in dollar index due to recent deterioration of the relationship between China and USA has resulted in upswings in gold trading. This increased the curiosity of investors that how much gold and global equity should be included in the portfolio in order to make the portfolio less risky.

The portfolio diversification has been considered as best way to reduce the risk of the portfolio as we may get negative correlation between the various financial securities.  By diversifying your portfolio by commodities, debts, equities and real estate funds can diversify the portfolio risks by spreading it to all the securities in the portfolio.

Gold has often been considered as a safe haven for the investors, but the last decade has witnessed an underperformance of the gold. But however, nowadays gold is doing very well and has high returns. So the addition of gold in portfolio will give you better returns of portfolio, but, there must also to be noted that addition of gold can increase the volatility of your portfolio.

According to the experts the choice of portfolio should be made on the basis of how much an investor is ready to accept the risk. They suggest that an equity portfolio with gold and global equities could be a better portfolio for current situation.

Author:

Alok Aditya

alokaditya@easilyeconomics.com

 

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