Traditions hold immense significance, often passed down through generations, and in India, one such tradition is the accumulation of gold. Indian households are estimated to possess nearly 25,000 tonnes of gold, valued at over $1.5 trillion.

For traditional purposes, hoarding gold is acceptable, as cultural beliefs are deeply rooted. However, if viewed as an investment, diversifying one’s knowledge about investment options becomes crucial. Rising inflation has drawn people to gold, given limited confidence in financial assets. Yet, understanding market cycles offers an opportunity to generate steady returns surpassing other asset classes.

Gold performs well when interest rates are lower than inflation, but modern monetary policies focus on inflation targeting, keeping rates in check. Stable or declining interest rates favor equity markets and businesses, encouraging expansion and higher profits.

India’s growth ambitions demand that businesses consistently increase profits, typically at twice the GDP growth rate. Investing in exchange-traded funds tied to benchmark indices like Sensex or Nifty can potentially yield returns that beat inflation.

Financial experts recommend allocating no more than 10-15% of a household investment portfolio to gold. Consulting a financial advisor for appropriate asset allocation is advisable in this endeavor to balance tradition with modern investment strategies.