Gold as a long term investment!

Gold as a long term investment

Gold is one of the most common commodities that investors invest a lot in, especially in India. This is because it is a time-tested asset with a higher return. It is thus a safe haven and can easily be converted into cash. The conversion can be easily done from banks or gold merchants, that too in a very short period of time. Thus, you can cash in the amount in times of crisis.

It is true that gold has given higher returns but its valuation has been relatively stagnant over the last few years. Hence, traders and investors have now started investing and focusing on other assets. But gold could still be highly beneficial as an investment.

Related: Gold ETF Vs Gold Saving Fund: Which one is right for you?

Advantages of gold as an investment

Here are some reasons that you must consider before diverting your attention from gold to other investment possibilities:

  1. Tax Benefits: Some of the gold funds lead to tax exemption. Thus, besides getting a higher return, you also get to save tax money. Tax exemption is permitted as some of the gold funds are treated as non-equity products. Investors investing in these gold funds can easily avail the tax benefits but he or they can do so only after a year has passed since the investment.
  2. Diversification of Investment Portfolio: This is a very important reason behind investing in gold funds. In case you can’t afford to invest a huge amount in a gold fund, you can start investing with a small amount as well. If you keep investing small amounts at regular investments, it would eventually sum up to a much larger amount. And if you invest in gold, your investment portfolio can be easily diversified. Moreover, investments made in gold can also be easily liquified and there are no restrictions on the time period for redeeming your fund.
  3. Effective Inflation Hedge: Gold has always been considered a good hedge against inflation. It has sustained this behavior even during recessions and pandemics. Thus, it has lived through tremendous asset appreciation and could always be a good investment choice. It is also beneficial for people with very little risk appetite as there are almost no associated risks with gold investment.
  4. No Drastic Change in Underlying Value: Here is something that gives gold an edge when compared to other assets or investments. Even if the price of gold drops low, the underlying valuation of the yellow metal does not really change. Thus, while other investments could be running at a loss, money invested in gold remains safe which is why gold investment has always been popular. It will save you hard-earned money even when the market circumstances are very unfavorable and equity market shares fall.

Related: Top 5 Gold ETFs in India

Thus, it is quite clear that gold investment is always a good choice. It will save your money against market risks. Gold is thus an investment that assures high security and has almost zero risks. This is why gold has always been a very popular investment for a very long time. 

In case you don’t know how to purchase gold, you can start with baby steps. Buying gold coins, jewelry, or bullions could be what you start from. You can invest either in physical old or digital gold. Thereafter, you may also explore Exchange-Traded-Funds (ETFs) or other gold funds. This is a safe choice even if you have no proper knowledge about the market. 

Gold investment can be very fruitful in the long return. With high returns, you can make your dreams come true and also cash in the amount during any emergency. Also read, What makes a better wedding gift: Gold Jewelry or Gold Bonds?