Expert investing tips: Rishi Nathany, Director, Touchstone Wealth

Last Updated: Fri, Sep 02, 2011 04:56 hrs

Gold prices have been rising steadily over the last few months. Is it advisable to invest in the commodity right now? I have Rs 80,000 as surplus. Should I buy physical gold or invest through exchange-traded funds (ETFs)?

Any investment decision should be based on your long-term asset allocation and investment strategy.

This applies to investing in gold as well. In case the global problems abate, gold could correct.

On the other hand, if the situation aggravates, the metal could continue to trend higher as a safe haven investment. If you want to buy for trading purposes, you will have to take your own call.

However, in the long term, gold has historically proved to outpace inflation and is a good hedge against it.

Regarding your choice of investment, it depends on your end usage. 

If you want to buy gold for personal consumption, that is, for making jewellery, you could buy physical gold.

However, if you want to buy it for investment, take the ETF route.

I hold some mid-cap information technology (IT) stocks and my notional loss is Rs 50,000. With the global problems expected to worsen, what is the outlook for this space? With a horizon of two years, I invested in these last November. However, given the quantum of notional loss, should I revise my holding time or book losses and exit before it gets worse?

The problems in the US and Europe may worsen and the IT industry may face some more turbulence due to this. However, the stock markets seem to have factored in these issues already by severely beating down the prices of IT stocks, especially the smaller ones.

Also See: Global turmoil and the threats it holds for the Indian economy

Whether it is the IT sector or any other industry, an investor should enter with a clear, long-term investment horizon and, unless things go horribly wrong structurally with that sector, he/she should not react to short-term news.

You will have to decide if you want to revise your holding period or exit your investments, but, as I see it, your decision should be based on fundamentals, not fear.

Broking firms are offering systematic investment plans, or, SIPs in stocks. Given the prevailing market conditions, is it advisable to invest through SIPs? Should one invest a pre-decided amount or buy pre-fixed quantities?

Whether it is a broking firm or mutual funds, I feel it is a very good time to start investing in equities through SIPs.

The markets are at attractive valuations.

Also See: The scariest thing about the world economy

While they could fall further, equity, as an asset class, has historically outperformed most other classes. You should invest pre-fixed amounts, not pre-fixed quantities, to keep your instalments even over the SIP term.

The writer is director, Touchstone Wealth. Views expressed are personal. You can send your queries at  

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