Investment in Gold

We spoke in the earlier articles about investment in Equity and Debt. Let us now look at investment in gold. Gold was never considered as an investment option. Even if it was, the maximum amount recommended has always been 5%. But this has changed in recent years, especially with the price of gold just going up. As we all know that we make a profit if the price goes up, so any investment which increases the net worth of a person is worth investing. This is the reason for gold becoming the favorite of many.
 
Like all the people, even we want to invest in gold, so what do we do? Do I go to the jeweler and purchase gold or go to the bank and purchase gold? There are many options. Seeing the appetite for gold, many mutual funds started exchange traded funds (ETF). This gave the purchaser more flexibility, they could invest lesser amounts as well and the chances of cheating by jewelers (which was always the fear) became a thing of the past. It also increased liquidity.

 As mentioned earlier, gold is not a recommended investment. It is good only when faith is lost in the currency system of the country. It should be used only as a diversification for your portfolio, as gold has never beaten inflation. It is not a hedge against inflation, just like debt. Yes, in recent times it has appreciated quite a bit, but so has inflation. Earlier financial planners used to suggest 5% but seeing the rise in prices, they too have increased their recommendation by another 5%, some enterprising planners might go to 15% but not more.

So now if you have decided to invest in gold, it is better to go for ETF, as it is more convenient, with less risk of burglary. The risk of storage and safety is also taken care of by the mutual fund. There is no fear of the jeweler cheating you and you can sell whenever you require money. Now all you need to purchase ETF is a demat account. Happy Investing.