Advantages of investing in gold
Gold is not only valued as an ornament but metal is also a popular form of investment in India. Most of the families treasure gold for ages passing it on from one generation to another as a form of asset.
But the physical gold has the risk of depreciation (due to several charges such as making-charge, level of gold purity) and of theft. So, the best way to invest in gold is through Gold ETFs and Fund of Funds (FoFs). You don’t have to invest a lump sum amount at once, start with a small amount such as Rs 500 through regular monthly SIP in Gold FoFs. This will not look big in a short time but over the years you will enjoy its growth potential.
Some of the advantages of investing in gold include
- Hedge against inflation: Gold has shown positive results even during the economic downturn and market volatility. It serves as the best hedge against inflation. Gold has seen strong asset appreciation in the long-term and emerged as a must-have in one’s investment portfolio.
- Portfolio diversification: Gold is an easy and convenient way to diversify your investment portfolio.
- Start with a small amount: You can start investing in gold with a small amount to save regularly for the long-term.
- Easy liquidity: You can sell your gold anytime or redeem your gold fund as and when you need it.
- You can avail of Gold Loan on easy terms and monetize gold on easy terms, without losing ownership of your asset.
- Tax Benefits: You can claim long-term capital gains tax benefits on these funds after a period of one year of investments.
Is gold a good investment option in the recession?
Typically, yes, gold is known to show a steady and good performance even during the recession epochs. Unlike the riskiest asset like stocks, gold is a tangible asset that people tend to invest in during hard economic times. In fact, gold has an impressive history of stupendous performance during inflation.
Even when the price falls, does the underlying value of gold change drastically?
Since gold is known to hold an inherent value across a time frame, its core value remains less affected even when the price stoops low. This again makes gold a beneficial investment alternative.
How gold is related to equity investments like stocks and bonds?
In common terms, gold is inversely proportional to shares and allied equity investments. This means that whenever the equity market starts performing badly, gold inevitably performs well.
How to invest in gold?
You can start with the conventional way of purchasing physical gold like coins, bullions, artifacts, or jewellery. In addition, you can also choose the newer form of gold investments like gold ETFs (exchange-traded funds) and gold funds.
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