WHY INVEST IN GOLD?... AND WHY NOT?

Indians have always had an affinity for buying and investing in gold. This year’s Akshaya Tritiya, considering the auspiciousness of the day, also saw many people investing in the metal. But like any other form of investment, gold also has some upsides and downsides. Keep reading to find out whether gold is the right choice of investment for you.

THE (GOLDEN) PROS

Ease of buying:

First things first, buying gold is simpler and easier than investing in stocks or property. All you have to do is go and buy some from a trusted source. It does not require much knowledge about the market and is considered as a safe investment option.

Security during inflation:

Even though the value of a currency drops during inflation, the value of gold tends to remain constant or increases. Therefore, in times when the market is down for a longer period, gold becomes a tool to hedge against inflationary conditions. This pushes gold prices higher in the inflationary period.

Diversification:

Investors usually prefer investing in various places and not putting all their cats in a single bag. Gold is one of the key ingredients of this investment mix as, if someday, the value of the property, stocks or bonds you have invested in plummets, the value of the gold you have invested in would still be constant or better than before.

THE (NOT SO GOLDEN) CONS

No income until sold:

One of the greatest cons of owning gold is that it gives you no income unless it is sold (provided it is sold at a price higher than it was bought at). It is expected of an investment to give you some kind of passive income when owned, for example, if you buy a piece of land, you can rent it and earn from the same. This money can later be used to invest in something else to potentially increase our wealth. With gold, however, that is not the case.

Investments in the form of gold jewelry:

Most of us tend to invest in gold in the form of jewelry. However, while doing the same, we are paying a good amount of it for the making and wastage charges to the seller. However, when the same jewelry is sold, these charges remain unaccounted. Also, the questions on the purity and genuineness of gold make it difficult to transact.

Low capital gains:

History is proof that when it comes to returns, gold is a lousy investment. Over the long run, gold has performed much much lesser than bonds and stocks.

In a nutshell, gold can provide an investment safe haven but could affect your returns in the long run. We have listed down the reasons why you should invest and not invest in gold. What are your thoughts on the same? Let us know!

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Cedrus Wealth Partners

Pune, Maharashtra.

www.cedruswealth.com