Thursday, January 21, 2021

Gold Is a Good or a Bad Investment Option in India?

Most of the investment advisors come and given this one investment advice, again and again, are that investing and gold is not a viable option. It is the crucial safety announcement that they impart periodically in the best interest of the investors. In the year 2019, the prices of gold has increased by 20% and this have led to an urge in the minds of the owners to buy more gold from the point of investing. However, it is the worst investment decision that anyone could ever make.

Going by the stats if 2019 is not considered then in the last ten years, the return on gold has been 8.3%, which is relatively low. It was this low return that makes it a dull investment. However, the volatility that has been observed makes gold lure investors.

Investing in gold is an option for that investors who have no access to the financial system not, do they believe in it. The reason that gold is not a favoured option for investment is because of the return that it generates and also the mode in which it delivers the return.

Indian investors still have traditional view of gold and take it to be a simple and useful investment. They consider it to be a protector during hard times. The modern market is that gold is a commodity and should be traded like other commodities. It should be considered that savers could consider taking it as an investment option but, there are several flaws associated with it.

Any investment is called good investment only if it gives good returns, has high liquidity, stability, and a few other factors. Owing to these factors, it is for sure that gold is not a good investment option. The return on gold investments is less as compared to other investments. Also, the associated risk with gold investment is high. Gold, in its true sense, does not produce anything or create value. The rise in the value of gold is for the reason that someone wants to buy it. Gold has no contribution to economic growth. The same amount of money if kept in banks will generate or invested in the business will generate more income.

However, who invest in gold and take it to be a good investment for it has been there for centuries should now change the outlook. In modern economies, gold is not a good investment option. Still, if you want to invest in gold then invest in paper gold. Gold-backed mutual funds closely track the value of gold. These are open-ended funds and can be redeemed at any point. There value increases with gold plus an additional 2.5 % increase is there every year. The interest is taxable, but the capital gains are tax-free.