Every year, about three weeks before Diwali, my phone starts buzzing with the same question. "Should we buy gold this Dhanteras, or put the money in a SIP?" Families in Indore have bought gold at Dhanteras for generations, and the question is really about whether that habit still makes sense. My answer usually surprises people, because it's not "gold is bad" or "SIP is better". It's "which job do you want the money to do?"
First, separate tradition from investment
This is the most useful thing I can say.
Buying a coin or a small piece of jewellery at Dhanteras is a tradition. It's about the family, the festival, and the feeling. There's nothing wrong with it, and I'd never tell anyone to stop.
Buying gold as an investment is different. Then it has to be judged like any other investment: what it costs, how easy it is to sell, and whether it fits your goals. Mixing the two up is where people get confused.
So the first question isn't gold or SIP. It's this: is this purchase for the festival, or for the future? Both answers are fine. They just lead to different choices.
Jewellery is a poor investment
Here's the uncomfortable part.
When you buy jewellery, you pay making charges, and often wastage charges too. When you sell it back, the jeweller usually doesn't pay you for those, and may deduct more for purity. So a good part of what you paid can simply disappear.
That's fine if you're buying jewellery to wear. It's not fine if you think of it as savings. I've seen families surprised, even upset, when they tried to sell old jewellery and found out how little came back after all the deductions, and that surprise is exactly what I'd like people to avoid. Our page on gold versus mutual funds explains the difference in plain words.
If you want gold as an investment
There are cleaner ways now. A gold ETF holds physical gold of fixed purity and trades on the stock exchange. A gold fund of funds invests in a gold ETF and works like a normal mutual fund, so you can even run a SIP into it without a demat account.
No making charges, no purity worries, no locker. Our page on gold ETF versus gold fund compares the two.
You can also buy these in small amounts every month rather than once a year. That way you're not tied to the price on one particular day, and the festival becomes a moment to top up rather than the only time you buy.
Gold or SIP: they do different jobs
Gold has historically been a store of value that sometimes does well when shares struggle. It doesn't pay anything while you hold it, and it can go through long flat stretches.
An equity SIP owns a share of businesses. Over long periods, that has usually been the main way ordinary families grew wealth, with plenty of ups and downs along the way. Our page on equity versus debt funds explains the basic split.
So it's not really gold versus SIP. It's how much of each, for which purpose.
What about gold for a daughter's wedding?
This is the most common reason families in Malwa buy gold every year. Slowly building jewellery for a future wedding.
If that's your plan, it can still help to separate the two parts. Keep buying the pieces you'll actually use. For the rest, a gold fund or ETF lets you build value without paying making charges every year, and you can buy jewellery closer to the time, in the designs the family actually wants. Our page on saving for a child's marriage covers the wider plan.
Where to keep the gold you buy
Physical gold needs a safe place. Many families use bank lockers, which have a yearly charge and limited access. Some keep it at home, which carries its own risk.
Gold held through an ETF or fund doesn't have this problem. It's recorded in your name and held by a custodian. That's one of the quiet advantages people often forget to count.
How I usually suggest splitting it
I don't give a formula, but here's the pattern that works for most families I meet.
- A small amount for tradition. A coin or a piece of jewellery, bought with joy, not counted as investment.
- A modest slice of gold as investment, through an ETF or gold fund, if you want diversification.
- The core in your SIP plan, matched to your goals.
Our page on asset allocation explains why the core should follow your goals and dates, not the festival calendar.
Don't buy because prices went up
When gold or silver has had a strong year, festival season brings a rush of buying. That's usually the worst reason to buy a lot.
Buying after a big rise means you may be buying near a high. If you want gold in your portfolio, a small regular amount through the year is calmer than one big purchase on one auspicious day. Our page on silver funds says the same about silver, which swings even more.
What about starting a SIP on Dhanteras?
Lovely idea, and more families are doing it every year. If you've already decided to start a SIP, starting it on a day that means something to your family is a nice touch. Our post on waiting for an auspicious day talks about exactly that.
Just don't let the festival decide how much or what you invest. Decide that calmly first, then pick the day.
Watch out for festival offers
This season also brings special "festive" investment offers and new fund launches. Some are fine, many are just marketing timed for when people feel generous. Our post on why we don't run festival offers explains how to think about them.
If someone offers you "gold that doubles" or any fixed-sounding promise, walk away.
A quick word on silver
Silver has become popular at festival time too, especially after sharp price moves. It follows many of the same rules as gold, with one difference: it swings a lot more.
If you buy silver utensils or coins for the festival, enjoy them. If you're thinking of silver as an investment, keep it small and understand that it can fall sharply as well as rise.
So, gold or SIP this Dhanteras?
Buy a little gold for the tradition if it matters to your family.
Short version? Enjoy the festival. Keep the plan. And don't let anyone rush you into a big decision just because the date on the calendar feels special.
If you want gold as an investment, use an ETF or gold fund and keep it modest. And make sure your SIP plan, the part that does most of the heavy lifting for your goals, keeps running through the festival and after it.Happy Diwali in advance.
One last thought. Whatever you buy, write it down. Families often lose track of small gold purchases over the years, and a simple list helps everyone later.
If you want help setting up a sensible split before the festival, I'm happy to talk. Myfolios is an AMFI-registered mutual fund distributor (ARN-145870) working from Indore since 2014. Get in touch.