Gold ETF – Lump Sum or SIP investment?

POSTED BY Hrishikesh R ON October 8, 2012 9:10 pm COMMENTS (4)

I want to invest about 2 lakhs in Gold ETF. Which method should I opt for – Lump Sum buy or SIP method? As gold rate rarely fall sharply, a lump sum investment seems logical. This way my investment would be at a lower value than after a period.

But I have read everywhere that a SIP method is best to invest in Gold ETF. My logic is that I would average out on the small ups and down with a SIP, but the final value would be lower than it would have been if I had inveted lump sum.

Please correct me if I am wrong and suggest the right method.

4 replies on this article “Gold ETF – Lump Sum or SIP investment?”

  1. Hrishikesh

    I would say you should also look at the current situation , Diwali is coming next month , and you know that its going to be up due to festive season . Hence it will be a good idea to invest in lumpsum if you are considering to do it in few days !


  2. Biswa Singh says:

    If you buy gold at X and sell it after one year or 5 years then definitely it will more than X. SIP is better way if the gold prices goes down significantly. You never know. Only thing is that we dont see vaolatility too much in gold. But when the economy does well the gol price goes down. If you see the gold price then its down now after the announcement of the reforms. Also better opt of NSEL E-gold then ETF.

  3. Hrishikesh R says:

    Yes. I cannot know if the value is all time high or all time low. But as per the trend, it will be higher than that I got when I buy it.
    e.g. Today I buy Gold ETF for a value “x”. After 1 year its value would be say “x+5”.
    But with monthly SIP mode, since it averages the ups and downs, the final value after an year would be less than “x+5”.
    Am I correct in my assumption? Or do you still recommend the SIP mode? Why?

  4. Biswa Singh says:

    How do you know if the value is all time high or all time low? This is why SIP is used which makes you a diciplined investor only. If you know for sure that gold price will not reduce then there is no harm in investing in lump sum.

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