“Let’s invest all our money in Gold. It will go to 2lacs soon.”
This is exactly what a client told me around Diwali.
While I am certain gold will see new highs, the journey to 2lac is not going to be easy & smooth.
I shall try & share an important lessons on investing with recent history which every gold bull should know.
Let’s say someone invested in Nippon Gold Savings Fund (Direct Plan) 5 years back (September 2020).
You would be shocked to know that, it took more than 2 years to get your capital back to the purchase price. Also during this phase Gold dipped by 13.6% in 6 months’ time.
This experience would have left a lot of investors frustrated. They would have just sold all their gold as soon as the portfolio recovered back all its losses. This is what many investors are dong to their equity portfolio today. They would still come back & invest but only after missing few best returns month.
Do you want to know the impact of missing few important months?
Returns if you continued holding gold throughout 61 months: 16.6% p.a
Returns if you missed the best month: 13.9% p.a
Returns if you missed 3 best months: 10.6% p.a
Returns if you missed 5 best months: 7.5% p.a
As you can see from the example, to build wealth using any asset be it Gold or Equity it's important to be patient. Especially during the time when the assets underperform badly. It happened with gold between 2020-22 and with equity in 2024-25.
Your investing style is wrong if you believe you will buy today & the price will start taking off tomorrow.
They say journey is as important as destination.
Applied aptly to wealth creation. Brace yourself for the ride. What say?