Investing In Gold: All You Need To Know

Gold is considered to be a good store of value. A store of value is an asset that maintains its value, rather than depreciates. If you look at how the price of gold has changed over the past 20 years, you will see it has increased consistently. From ₹4990 per 10 grams in 2002, it is now priced at ₹52690. This translates to a gross increase of about 955%. Yearly, the growth rate is about 12.5%.

Gold price reference: https://goldprice.org/gold-price-india.html

Now, the difference between gold and other investment assets is the sheer stability that it provides. Let’s understand this with an example.

If you have invested in equity, you’ve chosen a company, say Reliance, and you have invested a sizable amount of your money. Reliance is a solid company right now. It has strong fundamentals, a healthy growth rate, and historical returns.

Right from the historical ages, gold has always been a precious metal. It is unaffected by the volatilities and fluctuations that plague the global financial markets.

This is why it is considered to be a store of value, a much better one than cash. If you keep your money in gold, you can rest assured it will not be affected by exchange rate changes or other downturns.

How Can You Invest In Gold?

Here are the different methods of gold investment in India.

1. Physical gold

Physical gold refers to the gold that you buy from jewellery shops. It includes all kinds of gold jewellery, plus gold coins and bars.

Now, we all know gold jewellery is pretty. But if you want to buy it solely for an investment purpose, gold bars or coins are a better option. This is because, for gold jewellery, you also have to pay a charge to the artisan or jeweller for their efforts. The making charge gets added above and beyond the price of the actual gold metal. If you resell it in the future, you will not get this amount back. However, there are some issues with the storage and safety of physical gold. As it is a conspicuous item and attracts a lot of unwanted attention.

2. Digital gold

Digital gold is ideal for investment purposes. Here, you essentially buy it online, and it gets deposited into your account. But you don’t get to touch it or see it. You just know that it is there. This option is highly liquid and can be converted into cash at any time. You can buy digital gold from several apps and websites. Digital gold, however, is not regulated in India, and therefore, carries an additional risk element.

3. Gold Mutual Funds

Gold mutual funds are the same as normal mutual funds — the only difference is that they invest exclusively in gold companies. This is an indirect method, as you don’t buy gold directly, but rather invest in the shares of gold mining companies.

Similar, but still different, is the option of investing in gold exchange-traded funds or ETFs. Here, too, you don’t buy the gold directly. But, instead of investing in the shares of gold mining companies, you invest in a collective vault of gold. Your money buys you a share of the total gold.

4. Gold Bonds

These Sovereign Gold Bonds are curated and released by the RBI for retail investors. Here, too, you don’t buy gold directly. Instead, each bond is denominated in gold and will earn you a fixed interest every year.

Don't miss:Karwa Chauth 2022: 7 Ethnic Outfits Under ₹1000 To Buy From Myntra

What To Know Before Investing In Gold?

Gold on its own is not a very lucrative investment. If you compare it with other investment assets out there, the rate of growth is much lower. The advantage of gold is in its stability, and can therefore be used as a method of minimising risk.

Don't miss:How To Incorporate Vitamin C Into Your Skincare Routine

In times of great market volatility or recession, financial assets fall significantly in value. At times like this, gold can redeem the value of your portfolio and arrest its fall. It is ideal to keep about 10-20% of your portfolio in gold, as a hedge against economic fluctuations.

Also Watch:

Will you consider investing in gold now? Do share your thoughts with us on our Facebook page. For more such stories, stay tuned to HerZindagi.