Gold or stocks this Dhanteras? What investors should consider before putting money in

Dhanteras is traditionally associated with buying gold, with households across India investing in jewellery, coins and other forms of the precious metal. However, the festive occasion also offers an opportunity to review investment portfolios and assess whether gold or equities deserve a larger share of one's savings.

While gold is often seen as a safe-haven asset during economic uncertainty and inflationary periods, equities are generally considered more suitable for long-term wealth creation. Both serve different purposes in a portfolio, and choosing between them requires a closer look at financial goals, investment horizons and risk appetite.

Rather than allowing festive sentiment or recent market movements to dictate decisions, investors need to consider how each asset fits into their overall financial plans.

Gold and equities serve different purposes

Gold can help diversify a portfolio, particularly for investors whose investments are heavily concentrated in equities. On the other hand, those with long-term financial goals and limited exposure to the stock market may consider increasing their equity allocation, depending on their risk tolerance.

Financial planning should determine how much gold an investor holds, rather than the occasion itself. Regular portfolio reviews and rebalancing can help maintain the desired mix of assets.

Should you wait for the right time to invest?

Gold prices around Dhanteras often attract attention, but buying during the festive season does not guarantee better returns. Domestic gold rates are influenced by international bullion prices, fluctuations in the rupee against the US dollar, import duties and geopolitical developments.

Equity markets, too, can be difficult to time. Instead of investing a large sum at one go, investors can spread their purchases over several months. Systematic Investment Plans (SIPs) in equity mutual funds offer a way to invest regularly and participate in market movements over time.

Look beyond the purchase price

The cost of investing can also affect eventual returns. Physical gold purchases involve making charges, wastage deductions and GST. Selling jewellery may involve additional deductions, reducing the amount an investor receives.

Those who want exposure to gold without storing physical assets can consider gold Exchange Traded Funds (ETFs) and mutual funds. However, these instruments also carry expense ratios and other charges.

Equity mutual funds and ETFs have fund management expenses and transaction-related costs that investors should account for before investing.

Dhanteras can be a useful occasion to reassess financial priorities. However, maintaining an appropriate asset allocation, investing consistently and keeping costs under control are more important for long-term financial goals than choosing a particular festive day to invest.