Gold has historically served as a hedge against inflation and geopolitical instability. Along with equities, it is prudent to have some gold allocation because it is inversely correlated with equities.
There are various reasons to invest in gold to create wealth and meet your financial goals. Mentioned below are top 7 reasons for you to consider gold as an ideal investment avenue:
The main reason people regard gold as a valuable investment is that it acts as a solid hedge against inflation risk. Over time, inflation erodes the purchasing power of currencies, so individuals with large cash investments are likely to lose value.
However, gold has outpaced inflation; having some gold investments is expected to protect individuals from the risks associated with inflation. You may prefer to invest in safer assets like gold in a developing country such as India, where inflation rates are highly volatile.
Gold is a tangible asset with the highest long-term value of any currency or asset in the world. Unlike other tangible assets such as land or buildings, buying and selling gold is simple. Gold can be easily converted into cash, which makes investments in gold a lifesaver in times of crisis. You can easily sell your gold items in a local jewellery shop, pawn shop or coin shop, as per your preference. This process is typically more streamlined and takes a shorter time than investing in stocks through a stock exchange. You can also obtain a loan against gold without any difficulty. Furthermore, digital gold has simplified and streamlined the buying and selling process.
You can include gold in your asset portfolio to diversify it and make it more resistant to market risks. Because gold has a low or no correlation with other asset classes, it is an effective portfolio diversifier.
Gold reduces portfolio volatility because micro and macro factors affecting other asset classes do not affect the price or value of gold. As a result, when the price or value of other assets in a portfolio falls, gold acts as a saviour, ensuring that the portfolio value is not adversely affected. You can invest in gold through an effective investment strategy, which will help you reduce risk and maximise returns.
You can use physical gold as collateral to obtain a loan from any lending institution. Gold loans are a secured type of credit. As a result, they have lower interest rates than personal loans. Banks or other lending institutions will return the pledged gold to you after you successfully repay their loan.
Because yellow metal does not deteriorate over time, there is no need to be concerned about its value.
Because there is a finite amount of supply, there will always be a demand for it, raising its market value. This makes investing in gold in India an excellent choice. This demand is especially strong in India, where gold is considered auspicious, and no celebration is complete without it.
One of the strongest benefits of considering gold as an investment is it can protect your investments and your standard of living during an unprecedented economic or geopolitical crisis. Further, depending on the nature of the crisis, gold can take the form of a profit machine. In simple terms, your investment in gold can save you from a financial crisis during uncalled-for situations.
One of the many features of gold is that it has universal value. It does not act as a currency today, but its role as money makes it an attractive investment option.
Gold has enormous storage value. Its actual value does not depreciate over time, and you can sell or exchange it at current market prices. Because precious metals such as gold, silver, and platinum have an infinite shelf life, you can store gold for an extended period and monetise it when needed.
For example, gold coins issued by rulers of ancient and mediaeval India have great value today and can be sold or exchanged in markets.
The various qualities of gold make it a precious metal to own in the form of jewellery, coins or even digitally. In the short term, gold prices can show volatility, which usually subsides with time.
Purchasing gold is not tedious, as you can do so through multiple platforms. Furthermore, you can choose to invest in gold in its physical form or through Exchange Traded Funds. This will offer you flexibility in this avenue.