Gold allocation explained: Here's how much of your ₹10 lakh or ₹50 lakh portfolio should be in gold

A simple age-based formula is gaining traction among investors as an easy way to decide how much gold should be part of an investment portfolio. According to Alok Jain, SEBI-registered Investment Advisor and Founder of Weekend Investing, investors can divide their age by two to estimate the percentage of their portfolio that can be allocated to gold. The idea was recently highlighted by Sanjay Kathuria on X, where he shared a clip from his podcast featuring Jain.

Age and gold allocation

The thumb rule is straightforward. Divide your age by two, and the result is the suggested percentage of your investment portfolio that can be held in gold. Going by this approach, a 30-year-old investor would allocate 15% of their portfolio to gold, while someone aged 40 would allocate 20%. At 50 years, the allocation rises to 25%, and by the age of 60, around 30% of the portfolio would be invested in the precious metal. Although the formula is not a universally accepted investment rule, it offers a simple framework for investors looking to diversify their portfolios.

The practical impact of this rule becomes clearer when applied to actual investment values.

 

For instance, a 30-year-old with investments worth ₹20 lakh would allocate about ₹3 lakh to gold under this formula. Likewise, a 50-year-old with a ₹50 lakh portfolio would hold approximately ₹12.5 lakh worth of gold. The allocation increases with age because investors typically shift from aggressive wealth creation to capital preservation as they approach retirement, making defensive assets like gold a larger part of the portfolio.

Gold demand and investment

Kathuria also explained why the rule focuses exclusively on gold and not silver. According to him, central banks around the world continue to accumulate gold as part of their foreign exchange reserves, reinforcing its status as a monetary asset and store of value.

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Silver, in contrast, derives a significant portion of its demand from industrial sectors such as solar panels, electronics and electric vehicles. This means silver prices are influenced more by manufacturing activity and economic cycles than by its role as a safe-haven asset. While silver has delivered strong returns during certain periods, its price movements are generally more volatile and closely linked to industrial demand.

Buying or selling gold based on market sentiment

Another key aspect of the strategy is rebalancing rather than buying or selling gold based on market sentiment. Kathuria said investors do not need to completely exit gold even after prices rise sharply. Instead, they should periodically restore the allocation to the target level.

For example, if an investor has a ₹10 lakh portfolio with a 20% target allocation, gold holdings would initially be worth ₹2 lakh. If gold prices rally and the value of those holdings rises to ₹3 lakh while the rest of the portfolio remains unchanged, gold would account for roughly 30% of the portfolio. In such a situation, the investor can sell the excess holding and bring the allocation back to the original 20% target.

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Financial planners say age-based formulas can provide a useful starting point for asset allocation, especially for investors who find portfolio planning complicated. However, they also caution that there is no one-size-fits-all allocation. The right exposure to gold depends on factors such as financial goals, risk appetite, income stability, investment horizon and existing holdings across equity, debt and other asset classes. Investors should therefore treat the age-based rule as a guide rather than a rigid prescription and review their asset allocation periodically to ensure it remains aligned with their long-term financial objectives.