This Diwali Should You Invest In Gold? What Are Other Options?

 India’s relationship with gold dates back centuries. Festivals become one of the excuses to buy gold coins and gold jewellery. Gold has been a favourite all-in-one investment option. However, with the price of precious metals soaring high, various other forms of investments have surfaced that can deliver superior returns.

Historically, gold has provided a hedge against inflation. It is also considered as a hedge against volatility. It has long been touted as a diversification asset. But with the introduction of digital gold and Gold ETFs, physical gold is losing its attractiveness as an investment destination. Besides, if one were to evaluate the returns, the Gold ETFs has delivered superior returns over the physical gold.

Now, it is not extremely necessary that you have gold in your portfolio. It is quite al-right if you do not have any gold in your portfolio. You can always fall back on some well-chosen equity funds to help you in inflation. A lot of people go big on gold, and it is alright. But, remember to not invest in it in the form of jewellery, it does not deliver high returns anymore. Your investment of gold should be in either ETF or gold bonds.

If you are afraid to invest in Gold ETFs, you can invest in the Sovereign Gold Bonds issued by The Government Of India. They are considered extremely safe. One can buy as low as one gram of gold. One can invest with as little as Rs. 5000.00 making it an extremely convenient instrument for investing in gold.

As mentioned above, investment in gold helps to diversify the portfolio. Your portfolio is a database of all your investments and their corresponding returns.

Remember that- when you are investing, always make sure that you include instruments in your portfolio in such a way that, one financial instrument nullifies the disadvantages of the other.

This means you minimize your losses in your entire portfolio, and on the other hand, if the market is in your favour, you can make the most of your riskier investments. this is called “diversifying”. So, even if you think you made a mistake with one of your decisions, the other assets would help in covering the loss, you can withdraw from the unwanted investments.

If you do want to invest in gold, invest about 5-10 per cent in it, and not more than that. Like other financial instruments, the selection of Gold ETFs and commodity mutual funds requires expertise. Hence, it is always advisable to seek the guidance of your financial advisor before making investment decisions.

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