Gold Investment in India?
Let’s Figure it out!
Gold is a favorite investment by everyone in India. Its inflation-beating capacity and high-liquidity are its selling points, not to miss, prestige, beauty and so on. However, there are situations wherein markets witness a fall in gold prices, but it never lasts, and always end-up in coming back as strong as ever.
A Bit More
GOLD INVESTMENT IN INDIA – WHY?
Returns, Safety and Liquidity are the three criterions most investors look for before investing in gold.
Whilst, gold meets the first two criterions in a good way, though, it doesn’t do that bad at the last one. Reasons to look for:
- Gold has an inverse relationship with equity investments. For example: If the equity markets are performing poorly, then gold will perform well. Considering the gold investment in your portfolio will be a buffer to the overall volatility of your investment portfolio.
- Gold investment is worth because it’s an inflation beating investment. Over a certain period, the return on gold investment is in line with the inflation rate.
HOW TO INVEST?
Here comes the golden question… Traditionally, it was buying gold physically in the form of bullions, jewelry, coins, or artifacts. But now, there are many advanced forms of gold investment such as Gold Funds and Gold exchange–traded funds (ETFs).
Though, Gold ETFs are equivalent to buying physical gold, but without the hassle of having it securely store. Here, there is no possibility of burglary/theft as the gold is in Demat form.
WHAT ARE GOLD FUNDS?
Investing in gold funds is to invest in the stock of companies operating in gold-related and gold activities. Not to miss, gold mutual funds also include platinum, silver, and other metals in their portfolio basket. A mutual fund manager on behalf of AMCs manages a gold fund (unlike gold ETFs). They analyze the fundamental trading to buy/sell stocks, thus, trying to maximize returns for the investors. NOTE: Returns from gold funds depend on conditions of the market.
GOLD INVESTMENT vs MUTUAL FUNDS
|Particulars||Gold Investment||Mutual Fund|
|Definition||Gold is preferred as a high-value precious metal that is liquid in nature.||Pools investors money in debts, equities & other market instruments for growing money.|
|Risk Involved||Storage of gold & physical carrying involves high-risk of burglary & theft.||Investment in mutual funds can be done with secure and safe methods.|
|Management||Investor himself manage his/her investment.||Experts manage investment to reduce risks & create wealth.|
|Investment Cost||Depends upon the on-going average cost. Make sure you consider the price before making an investment.||Mutual fund investment is flexible and affordable. You can start with as low as INR 500.|
|Returns||Gold doesn’t pay any dividends.||Here, mutual fund gives better returns to the investor.|
Every investment has its own merits & demerits. For gold investment in India, the safety & security of protecting gold physically can be cumbersome and risky. If not gold, you can consider other viable investment – Mutual Funds. They are more tax-efficient as and when compared with the traditional ones. Hop on to Gulaq for the same.
*Mutual fund investments are subject to market risks. Please read the scheme information and other related documents carefully before investing.