Why am I losing money trading Gold ETFs when physical gold always seems to give great returns?

Bringing an equity-trading mindset to gold destroys wealth. There is a fascinating behavioral anomaly in how Indian investors treat physical gold versus Gold ETFs or equities. Traditionally, families buy physical gold and never check the price again.

It acts as a generational buy and hold asset. Because they never sell it, they allow the asset to compound wealth over decades and capture those historical 13-14% returns during bull runs. However when you buy Gold ETFs, you are suddenly exposed to the daily price on your phone screen.

You start monitoring the daily price changes and end up trading based on short-term noise rather than holding for the long term. Failing to apply the generational patience of physical gold to your ETF or equity portfolios is exactly why the returns don't match up.

The ultimate key to wealth creation is the ability to hold an asset class through its entire cycle. Asset allocation is a deeply personal exercise but it only works if you let the math play out. If you need a specific corpus in five years, you calculate your required rate of return across equity, debt and gold.

A multi-asset strategy combining these classes has a much higher probability of delivering a stable median return. But that stability only happens if you stop checking the daily price and let the assets compound.

Disclaimer: All information shared above are strictly for educational and informational purposes only. It should not be construed as financial or investment advice.