Is Gold A Good Investment Option For A Retail Investor?

Last Updated on Jun 15, 2023 by Harshit Singh

In a world of financial uncertainty and fluctuating markets, one asset that has stood the test of time is gold. Even when global equity markets tremble, or political tensions rise, gold is the first to get affected in value, but in a good way – its value skyrockets. But with gold now standing at ~Rs. 61,795, which brings us to the question – is gold a good investment option for a retail investor looking to grow wealth over the long term?

In this blog, we have encapsulated ten reasons why you should invest in gold in the 21st century.

Table of Contents

Ten reasons make gold a good investment option

Investing in gold has its perks, and here are ten compelling reasons that highlight the benefits of gold investment –

Protection against inflation risks: Gold acts as a hedge against inflation as historical observations have demonstrated that gold has consistently outperformed the inflation rate, making it an attractive option for risk reduction.
Investment for the future: Investing in physical gold provides an excellent way to save money for the future, as it offers the potential for good returns in the long run.
Easy to buy and sell: Gold can be easily purchased from trusted sources such as jewellery stores or banks and sold to local jewellers or traders for immediate cash. It is a liquid asset that is always in demand.
No maintenance charges: Gold does not require any maintenance and can be safely stored in a secure place for many years without deteriorating in quality and value.
Price stability: Gold prices are relatively stable compared to other investment options, making it a preferred choice for investors. It retains value even during financial crises and can be tracked for price fluctuations.
Easily transferable ownership: Gold can be easily passed on to the next generation without paying additional tax. It retains its value and can be exchanged for new gold jewellery.
Collateral for loans: Gold can be used as collateral to secure loans from banks and financial institutions in emergencies. These loans usually have lower interest rates.
Diversification in an investment portfolio: Investing in physical gold provides a balanced approach to diversifying investment risks, complementing investments in the stock market and real estate. Also you can invest in other forms of gold as well, like digital gold, gold ETF, SGBs.
Secured investment: Irrespective of market fluctuations, gold is considerably less prone to fluctuation than other assets. Therefore, in a volatile market, investors prefer investing in gold to safeguard the investment while making decent returns in times of economic turmoil.
Evergreen investment: When you invest in gold, your investment grows with time. Gold does not deteriorate or lose its value with age, and old gold ornaments hold the same market value as new ones.

How to invest in gold?

Many retail investors prefer Investing in gold bullion, such as coins, bars, and jewellery, as investing in physical gold offers a sense of security. Even though purchasing physical gold can result in expenses for storage, it is the most desired investment option by many retail investors. On the contrary, if you’re looking to evade the hassle of storing physical gold, you can opt for other desirable gold investment instruments like Gold ETFs, where you receive electronic units representing physical gold upon investment.

Using Tickertape, you can find suitable gold ETFs that align with your investment ideology.

Conclusion

In a volatile financial landscape, gold as an investment stands as a stable and valuable investment. Its ability to protect wealth, consistent global rates, and historical value make it an attractive option for long-term goals and diversifying portfolios. Consider consulting with a financial advisor to determine the ideal allocation of your portfolio to gold, allowing you to diversify risk and protect your investments.

FAQs

What are the different forms of gold I can invest in?

In India, apart from physical gold, you can invest in –
Digital Gold: Digital gold investment is a virtual representation of a paper asset, symbolising ownership of gold, but the actual physical gold is held securely by a custodian. You can buy gold digitally with as little as Re. 1.
Paper Gold: Paper gold can be defined as an asset that mirrors the price movements of gold but does not possess physical form. By owning paper gold, you can partake in the market’s gold value without needing physical gold.

Which is the best gold investment plan?

It depends on an investor’s risk appetite and investment goals, as physical gold is a dependable choice to preserve long-term wealth and suits low-risk investors. On the other hand, digital gold is better suited for short-term investments, high-risk tolerance, and individuals valuing liquidity and flexibility.

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Harshit Singh

Content Strategist at Tickertape

Hey there, I’m Harshit Singh Mahey! With eight years of experience as a Content Strategist, I’ve had the pleasure of working with a Fortune 100 company and building three successful startups from the ground up.

As an investment fanatic, I’ve dabbled in early-stage startups, mutual funds, gold, stocks, smallcases, and real estate to identify which assets generate the highest ROI. At Tickertape, I’m dedicated to presenting my learning and providing insightful suggestions to help my readers make sound investment decision.