Planning To Invest In Gold? 10 Facts You Should Know
We Indians are in love with gold. While many of us consider it as an auspicious metal ideal for festivals and occasions, it is also an easy and risk-free investment option. Traditionally gold jewelry, coins and bars were the form of investment. However, today, other forms like gold funds are also making their space in the gold investment market. Although, demonetization brought down the gold market in the end of 2016 to a large extent but slowly the gold rate has increased because of its increasing demand. One of the major reasons why people invest in gold is because even during inflation, gold offers a hedge against currency or economical risks; secondly, because of the need to diversify their overall investment portfolio.
Before you go ahead and invest your hard earned money on gold, make sure that you know and understand the following facts.
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Gold Is Not Really an Investment
Many experts don’t consider gold as an investment as its output is different from other types of investments. It is more like a hedge against economic shocks in the future. The outcome of these investments depends upon the gold rate in India, which can go up or down purely based on its demand and supply.
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Jewelry Is Not a Good Gold Investment Option
Jewelry is the most common and traditional form of gold investment. However, buying jewelry an investment is not considered as a good option. This is because the buying cost of gold jewelry also includes making charges (10% to 40% of the total gold rate) but when it comes to selling the same piece, the making charges are deducted along with wastage charges. Thus, getting the true value of your jewelry becomes difficult.
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Gold Investment Comes In Different Types
When it comes to investment, gold has different forms. Each of these options has their own pros and cons. However, one must make an investment carefully as per their needs. Other than jewelry, following are the types of gold investments.
- Gold Coins or Bars: If you are looking for long term gold investment then coins and bars are good options. You can buy them from the banks or authorized gold jewelers. Also, one can get easy cash with no additional deductions while selling them to the jewelers.
- ETF (Exchange Traded Funds): This is an easy buy & sell, non-physical form of gold investment with zero storage charges or theft issue. However, the fund house charges a small commission (1%) of the total portfolio value. To invest in ETFs, the investor should have a demat account.