Why Investing in Gold Is Wise

During the past few years, GOLD has proved to be the most consistent and best investment option. All other investments avenues like equity, MF, SIP’s, PPF, FD, etc have not been able to match the shine of GOLD. The return on GOLD investment during past 4 years has been around 25%. Due to the high return and introduction of easy investment methods, people have been flocking to invest in Gold. Most common ways to invest in Gold are listed below:

Jewellery

Most Indians still prefer the age old method of buying GOLD in the form of jewellery. Apart from being the most easy form of buying Gold, this also gives a huge satisfaction to the female members of the family. Women love to possess more and more jewellery (is there any husband who would dare to differ on this J). But the investment in Jewellery, in my view, is not the best option. Firstly there are making charges(around 10-20%) when you buy gold jewellery which is completely lost while selling the jewellery. Also at the time of selling the gold jewellery there are deductions on account of purity, degradation like wear and tear, damage etc. So one never gets the full value of his Gold while selling. Again ensuring safety of jewellery at home is itself a task.

Gold Coins/Bars

These days almost all banks and Gold merchants sell gold coins which are 99.99% pure and are certified by Standard Agencies like Hallmark. Hence the problem of searching pure gold is almost a thing of the past. Apart these coins are available in very small denominations like 2 gm, 5 gm, 10gm, 25gm, etc. So anyone with even a low budget could invest in Gold coins. Though these coins to not have the making charges, but then while selling them these are purchased at a discounted price. So though unlike jewellery there is no loss of making charges which but then one still do not get 100% value of his Gold at the time of selling.

GOLD ETF

Gold ETF is purchasing Gold in Demat Format. This in my view has the biggest advantage that one does not get the delivery of the physical Gold, hence no problem of securing your purchased Gold. Also Gold could be purchased in small units. One could hold his gold in demat account till he desires. There is only a small maintenance and brokerage charges on the Demat account, so this in my view is the easiest and cheapest form of purchasing Gold. Also one could sold his gold anytime at the market price of that particular moment. So there are no deductions and one gets almost the full value for his money while selling it.

Gold Funds/Bonds

These days there are a number of Gold Funds or MF’s where one can invest. These bonds invest the money only in the bullion market and are managed by Professional Experts. So if one do not have time or expertise to deal directly with the fluctuations of the gold market he could still invest via these bonds. However most of these bonds have entry and/or exit fees and have a certain lock in period. So this form of investment is mostly a long period investment. Another advantage is that these funds gives the ease to invest via SIP’s. So one could invest in Gold in  small amounts over a long period of time.