How much of a Rs 50,000 salary to put into gold and silver, explained

In times of uncertainty and rising prices, gold and silver are the first names that come to mind when people think of safe investments. Historically, gold is said never to have let its investors down. Whether in a global slowdown, in times of war or amid rising inflation, gold has stood by investors like a strong shield. But putting all one's money into gold and silver is not a good bargain, as it can raise the risk of the portfolio. The question, then, is how much salaried people should put into gold and silver each month.

Take first those earning Rs 50,000 a month. Under the rules of financial planning, a person should save at least 30 per cent of their salary. That means someone with a monthly income of Rs 50,000 is expected to save at least Rs 15,000 a month. The real issue is how to invest this Rs 15,000.

Many people today invest through systematic investment plans (SIPs) in mutual funds. According to financial experts, about 20 per cent of a total investment portfolio should be in precious metals, that is, gold and silver. On that basis, out of monthly savings of Rs 15,000, the share of gold and silver comes to Rs 3,000 a month (20 per cent).

Of this, Rs 2,000 a month has been suggested for gold, because gold provides stability and also protection against inflation. Keeping Rs 1,000 a month in silver is described as appropriate. The reason is that silver is more volatile because of industrial demand, so it should be held in comparatively smaller amounts.

Now consider those earning Rs 1 lakh a month. If monthly income is Rs 1 lakh, savings can be up to Rs 30,000. Out of this larger saving, depending on the needs of the portfolio, a maximum of Rs 5,000 to Rs 6,000 a month can be put into gold and silver. Here too, keeping a larger share in gold and a slightly smaller share in silver will be beneficial in the long run.

The next question is whether to buy physical or digital. Jewellery is no longer the only option for buying gold and silver. To avoid making charges on jewellery and worries about purity, choosing a modern option is considered better.

Gold and silver exchange-traded funds (ETFs) are described as the best route for long-term investment. There is no fear of theft, and no extra making charges have to be paid. Through mutual fund SIPs, one can start investing in a gold or silver fund with a small SIP of Rs 500 or Rs 1,000. And for those who prefer to hold real gold, gold and silver coins or bars with a 999 purity hallmark should always be bought from a certified jeweller.

Overall, the real mantra of successful investing is portfolio diversification, that is, spreading investments rather than putting all earnings or savings in one place. Gold and silver give stability to wealth, so disciplined investing can make one financially strong in the future. This information is based on general information and is not investment advice. Consult your investment adviser before investing.