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Investment in Gold – viability and liquidity!

July 22, 2019
Gold has always been the preferred form of investment in India, due to its rich cultural value as a pure element. But in today's changing economy and times, should the investors still invest in Gold?

Investment in Gold!

Physical Gold like coins, jewelry, bars, and others have concerns about storage and liquidity.  Investors can invest in coins or bar form of gold as they have an assurance of purity. If the investment is made in jewelry, then the investor can also use it for wearing purpose.

Any change in the economy like inflation, political decisions, GDP and other all affect the prices of gold, sometimes adversely.

The difference between Gold and equity returns!

With chances of volitality in equity markets, shouldn't one keep some reserve investment in gold? What happened in 2008-09 is not a normal phenomenon, both the markets of equity and fixed investment were down. So many investors turned their capital to gold, increasing its prices.

Fixed income or market-linked products bring in money for the investors and create good capital in the long run. Gold can help in getting the principal amount and profits once it is liquidated and sold.

How should money be invested in Gold?

Compared to hard gold, paper gold investments are cost-effective and can be liquidated easily. Physical gold still has appeal as a product that has actual real-world use.

To keep the diversification factor in the portfolio, an investor can go for gold, along with market-linked plans, funds, fixed income products, and others. These other investments have a compounding benefit, and some of them give very good benefits in taxes as well.

Loan against gold

Investors also have an option to mortgage gold and get liquid cash in return. Some companies offer the options of loan against gold. If the has gold in the form of jewelry or others then it can also be used to get liquid cash in return. As the investor returns the money, he/she is entitled to get the gold back.

Investing can be tricky. Know more about HDFC Life's variety of investment plans.

ARN: ED/07/19/14819

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