Asset allocation is critical to reduce risk while still aiming for good long-term returns.
With gold and silver prices correcting sharply from their all-time highs and the stock market witnessing bouts of heightened volatility, investors are faced with a pressing question: how should they invest in these asset classes at this juncture?
For most investors, the objective of investment is to achieve financial goals, build wealth, and create financial security and independence.
However, personal finance isn’t one-size-fits-all; asset allocation should be tailored according to one’s age, occupation, risk preferences and investment horizon.
Experts say that with the Indian stock market trading near all-time highs and global uncertainties persisting, retail investors should adopt a balanced approach.
Mint spoke with experts to gain insights into how one should invest ₹1 lakh across different asset classes at this juncture. Here’s what they said:
The lion’s share: ₹75,000 in equities
Even as gold has delivered strong returns over the long term, experts say equities remain the best asset class for creating wealth in the long term. Therefore, a significant portion of an investor’s portfolio should be exposed to equities only.
“For a long-term investor, in general, it could make sense to keep a larger portion of the money in equities for growth, with some allocation to debt and gold diversification and stability,” said Prateek Nigudkar, Senior Fund Manager at Shriram AMC.
Within equities, Nigudkar said large caps could form the core holdings with mid and small caps as small and tactical exposures.
However, Nigudkar emphasised that any such allocation should be reviewed periodically and aligned to the investor’s personal financial situation and comfort with market-related volatility.
Vaqarjaved Khan, Senior Fundamental Analyst at Angel One, recommends the following allocation:
Equities: 60% ( ₹60,000), out of which 70-75% should go into large-cap stocks or large-cap index funds/ETFs for stability and lower volatility.
Harshal Dasani, Business head, INVasset PMS, said if a retail investor has ₹1 lakh to deploy today, the allocation should reflect both macro realities and India’s structural growth story.
Dasani suggests 70% of one’s portfolio should be exposed to equities, but diversified across market capitalisations.
“Around 20% in large-caps provides stability, strong balance sheets, and earnings visibility. Another 20% in midcaps offers participation in companies benefiting from capex, manufacturing, and domestic demand themes,” said Dasani.
Dasani said a relatively higher 30% in small-caps can be considered for investors with a three-to-five-year horizon, given India’s entrepreneurial depth and expanding formal economy
However, Dasani cautioned that the small-cap segment requires discipline and staggered investing due to volatility. The idea is not aggressive concentration, but balanced growth—using metals for protection and equities for compounding.
Gold should not exceed more than 25%
Experts typically recommend allocating 10–15% of one’s portfolio to gold and silver. However, given the stock market’s volatility and the strong outlook for precious metals, some now suggest raising this allocation to as much as 25%, particularly towards gold.
According to Khan, one should invest 25% of their investment capital in gold via gold ETFs or sovereign gold bonds (SGBs), as it is an excellent hedge against rupee weakness and inflation.
The remaining 15% can go to silver via silver ETFs for tactical upside from industrial demand in solar, EVs, and electronics.
“This 60-25-15 split offers growth potential from equities while providing strong protection through gold and silver. In the current environment of global uncertainty and FPI volatility, large-caps offer better risk-adjusted returns compared to mid and small-caps. Investors should deploy this systematically over the next two to three months rather than lump sum,” said Khan.
Dasani said with global central banks continuing to diversify reserves into bullion and geopolitical risks remaining elevated, a 15% allocation to gold and 15% to silver makes sense.
Dasani underscored gold offers portfolio stability and acts as a hedge against currency volatility, while silver, which has a dual role as both a precious and industrial metal, provides higher beta exposure to themes like renewable energy and electronics. Together, a 30% allocation to precious metals creates a cushion against equity drawdowns while retaining upside potential.
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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
