Gold Investment Rule: Previously, people only bought gold for weddings and festivals, but now gold has become the most reliable investment tool. Gold prices saw a significant surge in 2025, prompting investors to once again turn to gold. Gold prices reached record levels in October, and people began reintroducing gold into their portfolios. The biggest question currently is how much gold is appropriate to buy. According to experts, the 5-15% formula proves to be effective for investing. This formula provides both balance and security.
Learn about the 5-15% formula?
The 5-15% formula suggests that you should invest only as much of your total wealth in gold as you are willing to risk. If you are active in the market and have a high risk tolerance, you can invest 5% in gold. However, if you want stable returns or are nearing retirement, you can invest 5% in gold. So, you can invest 10 to 15% in gold. For example, if you can afford to invest ₹20 lakh, then investing between ₹1 lakh (5%) and ₹3 lakh (15%) in gold would be appropriate.
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Benefits from Gold When the Rupee Weakens
For your information, if the currency weakens, gold prices rise. In October 2025, the rupee fell to around 88.8 per dollar, a record low. Therefore, investing in gold is extremely safe.
Buy Gold in ETF or SGB Form
There are many options for investing in gold today. If you have a demat account, gold ETFs or gold mutual funds are the easiest and most liquid avenues. They function similarly to the stock market. If you are a long-term investor, Sovereign Gold Bonds (SGBs) are the best option. They offer 2.5% interest annually, and the entire amount is tax-free upon maturity.
Pay attention to taxes and investments
It’s crucial to consider tax and holding periods when investing in gold. If you hold a gold ETF or gold mutual fund for more than a year, you’re subject to a 12.5% long-term capital gains tax. Sovereign gold bonds are tax-free upon maturity, but the annual interest is added to your income and is taxable. However, long-term capital gains tax applies after three years when physical gold is sold.
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How to Apply the 5–15% Rule
Suppose your total portfolio is worth ₹20 lakh. Investing between ₹1 lakh and ₹3 lakh in gold would be wise. Instead of investing the entire investment at once, invest through monthly or quarterly SIPs to improve your investment average.