Gold is a very precious metal. As the gold price are continue to set high, Gold is now most popular as an investment. Gold should be there as one of the investment in a person portfolio. For centuries gold has been used as an ultimate protection against inflation, fluctuation of exchange rate, natural calamities, stock price falls and many more.
Whether to invest in Gold or not is a frequently asked question and this question doesn’t have a simple answer because in itself is very speculative. But if we look at past 10-15 years Gold is a hedge against inflation growth rate has been much higher than the predictable appreciation. On an average of last 20 years, Gold has given a return of 700%.
Gold is good to invest because it retains its true value and its feature of high liquidity protects you from any unknown money loss. Gold should be a part of your investment portfolio because it gives protection, security and growth to your money.
Why to Invest in Gold
• Gold retains its purchasing power market cycles comes and go. Value of gold in terms of goods and services is stable. Prices of goods and services are rising, and purchasing power of currency is decreasing. Therefore, investors rely on gold to counter the effect of inflation and currency fluctuations.
• Production of gold is decreasing day by day. Production of gold is relatively inelastic, and its demand is increasing day by day. Generally if, demand for something is increasing and its supply is not then its price rises as there is a shortage. The reason gold prices are rising making it a good investment option.
• Investing in gold is the best way to diversify your investment. Gold provides stability to your investment. Price of gold can reduce, but it can never be worth zero. This is an excellent way to improve the overall performance of your portfolio.
• Gold is significantly less unstable than of the most commodities. It sometimes behaves like a currency. Assets with low instability will help to reduce overall risk of your portfolio, adding a helpful effect on expected returns. Gold also helps to manage risk more effectively by protecting against uncommon or unlikely but significant negative actions.
• Many people have gold they know that investing in gold is going to give them good returns. But the problem is that they don’t know the proper channels where to invest their gold. So today, we are here to let you know various channels where you can invest your gold and can receive a healthy return.
How can you invest in Gold?
Buying physical gold or coins or bars – Gold can be purchased in different physical forms. It can be gold jewellery, gold coins or gold bullion. Gold as jewellery is used for fashion as well as for prestige and can be used at a difficult time. Gold in the form of bar varies in its weight, and size. Bars can be purchased from a bank or from a dealer and can be held in secure vaults. Gold in the form of the coin is best for private investors by investing in small denomination and is very easy to store. Buying from a bank is expensive due to mark up and is more affordable than gold bars for the private investor. The disadvantage is that you have to take adequate security measures to handle gold in physical form and this form cannot be traded in the security market.
Gold Exchange Traded fund (ETF) -This is a mutual fund that invest in gold bullions by collecting money from various investors. These funds are listed and traded in stock exchange buyers can easily buy and sell like other stocks with ease at a click of a mouse. This is the safest way to invest in gold like shares you can buy them in small denominations each unit of gold represents one gram of gold. ETF has provided investors a cost efficient and secure way to participate in gold bullions and to without the physical transfer of gold. ETF also offers tax advantage, and there is no risk of theft and no physical transfer. ETF is the most convenient and safest way to invest in gold.
Gold certificates/Deposit schemes – Gold certificates are similar to paper gold they are proof in the form of certificates that you have this much amount of gold. In this, you have to deposit your gold to the bank at a predetermined period, and you receive interest from bank. Banks give you passbook or Gold Certificate as a proof of your gold holding with bank. The benefit of gold certificates is that it helps you to avoid the cost and risk of holding physical gold. It is a safe way to invest in gold bars as every bar is accounted and audited.
Gold Mutual Funds – Gold mutual funds can be bought, sold, or exchanged on any day the stock markets and are open for business. Shares of gold mutual funds can be held directly with the fund company or in your brokerage account. There is no need for storage, and if bought without a load, no brokerage expense or charges on sales. Mutual funds usual will redeem your shares on request without liquidity problems associated with bullion. While investing in gold mutual fund, you should consider the investment style, sale charge, expense ratio, portfolio turnover and record of past performance.
Gold Future – Commodity Exchange provides platform from where gold can be bought and sold with a settlement date in the future. Trading here are complex and involve huge risk most traders here trade Gold for speculation. Investors who have a wide knowledge and skill can use this form of investment.
We have discussed both importance and ways to invest in gold. Investing in gold is must it should be included in your portfolio. It provides you the ability to fight with inflation, financial and economic uncertainties.