Gold as an investment option was not so common earlier, as most of the Indians acquired this precious metal as jewellery or Gold coins. Unaware of the various means of investment offered by this yellow metal, people in the past used gold as an auspicious commodity that was offered/gifted during weddings, in festivals like Dhanteras, Akshaya Tritiya etc. However, with time, gold has started gaining its importance as an investment option.
With a constant instability in the financial market these days, people worry about the safety of their investments, and thus, are hunting for the safest avenues to park their funds in. In this regard, gold offers a bright future as an investment. If we consider the gold price in India today, a constant appreciation has been noticed over the years. This paved a way for investors to take this metal into consideration. Moreover, according to experts, the coming years will see a rapid increment in gold price and the metal will offer exciting investment avenues. Here are the 5 reasons why investing gold is a good choice:
- Inflation
Gold is a hedge against rising inflation. With inflation, the value of gold rises as well. As gold price is influenced by US Dollar, any deterioration in the dollar causes a rise in the price of gold. Due to this, during inflation, gold proves to be a more stable investment than cash or stocks.
- Liquidity
Gold can be easily converted into cash anywhere in the world. After hard cash, the universality or liquidity of gold is unmatched.
- Holds its Value
Gold maintains its value over time. Since the price of gold is not indicative of its value, if the price goes down, the underlying value remains the same or doesn’t get affected much. The reason is, a fixed amount of gold holds no inherent value as it is a commodity, unlike US dollar which is a fiat currency.
- Diversification
To diversify and lower the overall risk, it is best to branch out and maintain a broad-ranged investment portfolio. Since gold is affected much by the stock market and shares an inversely proportional relation with most currencies and stock markets, investing in gold is the safest way to diversify.
- Universally Wanted Investment
Gold is considered as a universal commodity. Unlike gold, currencies, treasuries and other securities that countries sell, are prone to political chaos. Since gold is used in production of jewelleries and electronics, it makes the gold price stable. Similarly, the rising demand for gold increases the price of gold.
- A Safe Haven during Economic Instability
Investors have continually found gold to be a safe haven during political and economic tensions around the world. While economic uncertainty is a great concern among modern communities, investing in gold is typically a safe choice to remain unaffected in the long run.
As investing in gold promises a good future, the next question will be – what are the investment options offered by this yellow metal? Gold comes in various options. The many ways to invest in gold include:
Gold as Bullion or Coin
If you have made up your mind to invest in gold, buying gold bullion or coins would be the better option. These are tangible forms of gold that can be sold in future. Having gold as a possession does feel good, however, the main issue is its storage. You will have to pay more to have it secured.
Buy Stocks in a Gold Company
You can also buy stocks in a company that mines gold. This way, the value of your stock will be interlinked with the value of gold. Moreover, you may also get a bonus on your shares.
Gold ETFs
Gold Exchange Traded Fund (ETF) is a type of mutual fund that invests in gold. The various units of MF scheme are listed in the stock market. To invest in ETFs, you need to open a demat and trading account and buy ETFs from the stock exchange. A certain amount towards brokerage fee will be charged for buying and selling gold ETFs.
Final Word!
Gold always perform well whenever there is an economic crisis. During the 2008 crisis, the gold price was 3 times higher than the dollar. In line with this, investing today in gold will reap a good return in the future. Moreover, in the time of market volatility, instead of evaluating various investment opportunities and weighing the disadvantages of investing in gold, you should analyse your investment needs. Since investing in gold fulfils your requirement and assures good returns, there is no harm seeing this precious metal from another angle other than jewellery.
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