Strong volatility in the stock market and sharp swings in gold and silver prices have posed a difficult question for investors: how should they invest through a systematic investment plan (SIP), or is it wiser to pause amid the turbulence?
The stock market benchmark Sensex has declined about 9% from its record high. Silver prices have crashed more than 35% from their peak, while the gold price has come off over 15% from its peak.
The prevailing market condition suggests there could be more volatility in the near term due to the US-Iran war. So, how should one invest now?
How to do a 25k SIP now?
Mint spoke with several experts to understand how investors should navigate the prevailing uncertainties. Here’s what they said:
The 20:80 split
Seemant Shukla, CEO of Quantum AMC, suggests considering the “12 | 20:80” asset allocation approach for investing.
Shukla said before starting a ₹25,000 monthly , investors must ensure they have already set aside 12 months of expenses in a liquid fund as an emergency fund (the 12). If that is already in place, then allocate the ₹25,000 monthly SIP using the 20:80 SIP Split.
In the 20:80 SIP split, Shukla suggests investing 20% of the amount ( ₹5,000) in gold via gold savings funds or Gold ETF.
Shukla suggests avoiding physical gold due to variance in price, making charges, and storage risks. ETFs or funds offer higher liquidity and market-linked prices and are regulated by SEBI. ETFs are backed by physical gold.
The remaining 80% ( ₹20,000) should go to equities, Shukla said.
Shukla recommends investing in a diversified equity fund that invests across large-, mid-, and small-cap stocks, following a value or multi-style approach, and avoiding sector- and thematic-focused funds.
According to Darshan Rathod, COO of Multify, for a ₹25,000 monthly SIP, a balanced approach works best.
“Around 60–65% should go into equities. This builds long-term growth. Within equities, keep it simple: a large-cap index fund as the core, and a flexi-cap or next-50 fund for growth potential. Around 20% can go into gold. Gold acts as insurance. When global tensions rise, or the rupee weakens, gold often provides stability,” said Rathod.
The remaining 15–20% should be allocated to debt or liquid funds, said Rathod. This adds safety and allows investors to rebalance during market corrections.
Exposure to gold can be increased
Some experts recommend increasing exposure to gold amid heightened geopolitical uncertainties.
According to Archit Doshi, Senior Vice President, PL (Prabhudas Lilladher) AMC, the current macroeconomic paradigm dictates a tactically balanced allocation of 65-70% toward equities and 20-25% toward gold, with the remaining 5-10% in liquid debt instruments.
Doshi emphasised that equities must remain the dominant allocation because they serve as the primary engine for long-term compounding, supported by robust domestic corporate earnings and systemic capital expenditure.
However, Doshi was quick to add that the strategic allocation to gold must be elevated to the 20-25% threshold to act as a critical macroeconomic hedge against the ongoing geopolitical uncertainties.
Doshi underscored that as global crude oil prices hover currently around $80 per barrel and are expected to rise higher than these levels, the Indian rupee faces severe depreciation pressures, which inherently magnifies the domestic returns of dollar-denominated assets like gold. This barbell approach ensures the portfolio captures long-term equity growth while utilising gold to absorb immediate inflationary and geopolitical shocks.
This volatility allows the fixed SIP amount to acquire mutual fund or ETF units at significantly lower net asset values (NAVs) through the mathematical advantage of rupee cost averaging.
Doshi said investors should not attempt to time the market by halting contributions, as historical data indicate that markets mean-revert to corporate fundamentals once supply-chain shocks stabilise.
Furthermore, Doshi said incorporating an annual step-up strategy of 10% to the ₹25,000 base will exponentially enhance the terminal corpus, effectively combating long-term inflation and capitalising on India’s structural economic growth.
Within equities, Doshi said capital must be aggressively rotated away from crude-consuming sectors like aviation, paints, and oil marketing companies (OMCs), which face immediate margin compression from surging raw material costs.
Instead, Doshi recommends investing in upstream energy (ONGC, Oil India), defence, and healthcare, which may offer high earnings visibility and insulation from imported inflation.
For gold, Doshi recommends that investors choose gold ETFs over physical gold for financial allocation.
“Gold ETFs do not incur jewellery-style making charges and are generally exempt from GST; they trade on exchanges (liquid for trading; settlement is T+1). Under the recent capital-gains changes, gold ETFs held for more than 12 months are taxed as LTCG at 12.5% (no indexation), whereas physical gold and some other paper-gold products generally need more than 24 months to qualify for LTCG treatment,” Doshi explained.
Read all market-related news
Read more stories by
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.