Full Circle Fin Planners recommends a 5-10% allocation to gold-based investments

“Gold prices over the last one year have gone up to approximately 14 percent in one year, whereas asset class like equity, true to its nature, has delivered a very tepid, like, you know, 1 percent type of return, it's almost negligible,” he added.

Ashar emphasized that gold should form a part of everyone’s portfolio, but not more than 5-10 percent. He said, “Conventionally, gold should form a part of everyone's portfolio, but not more than five to 10 percent. You should not go overboard on gold just because it is shining and not fall prey to people saying that there's no limit to it, because the moment things turn positive, I think gold will turn tepid.”

However, he warned that one should not take over exposure to gold for a temporary period. Because it's not a trading type of a commodity or something and it should be looked at as a part of one’s core portfolio, but up to five to 10 percent.

One of the most significant benefits of investing in gold is that it performs well during turbulence and negativity in equity markets. When stock prices are plummeting, gold tends to maintain its value or even increase in value. This makes it an ideal investment for those seeking to hedge against market volatility.

However, it's important to note that Kalpesh Ashar would not suggest investing in gold during the commencement stages. Instead, an initial investment portfolio should first be built by investing in equity and debt. Once this has been accomplished, gold-based investments can act as a powerful tool for diversification.

Indians have always loved stocking physical gold in the form of jewellery or bars. Gold as a physical asset is usually seen as a security, especially during times of economic uncertainty. However, this can also make it less liquid and more difficult to manage than other forms of investments.

Fortunately, there are other ways to invest in gold that are both liquid and easily manageable. Sovereign Gold Bonds, issued by the RBI on the government's behalf, are considered safe investment instruments. They provide investors with an opportunity to invest in gold without having to physically own it.

He said, “Sovereign gold bonds, are a sovereign instrument issued by the Government of India and we have seen tranches coming out for the last four to five years. And the best part about that is that it gives you also an additional 2.5 percent interest per annum payable on that as well. The only disadvantage with a sovereign gold bond is that if there's liquidity requirement or sudden liquidity, I think sovereign gold bond would not be able to fulfill that.”

Gold funds are another option for those looking to diversify their portfolio. These funds are liquid, making them easily accessible and manageable. They can also be used as contingency funds in case of emergency.