Why You Should Invest in Gold This Akshaya Tritiya
Investments in gold or other precious metals protect you from the risks of inflation. It has been noticed that gold has outperformed the inflation rate over the years and has served as an inflation hedge in the long run.
Image for representation. (REUTERS)
Akshaya Tritiya 2019 | Gold can never go out of fashion for investors. No matter which country you stay in, what your age is, which economic class you belong to, what profession you pursue--anybody who thinks of savings and investments has always given gold a thought, especially on days like Akshaya Tritiya, which is considered to be an auspicious occasion for buying the precious metal.
This year, Akshaya Tritiya will be celebrated in India on 7 May. And if you are confused whether you should buy gold or not, we can help you make a decision. Read below to understand the key benefits of gold as an asset class:
-- Investments in gold or other precious metals protect you from the risks of inflation. It has been noticed that gold has outperformed the inflation rate over the years and has served as an inflation hedge in the long run. The annualized return of gold over 10 years has been way higher than that of inflation, which means that the yellow metal has given individuals a real rate of return.
-- Gold is a highly effective portfolio diversifier due to its low-to-negative correlation with all other major asset classes. However, there is some evidence that when equities are under stress, an inverse correlation can develop between gold and stock markets. So gold can protect your portfolio in times of volatility.
-- Gold is highly liquid. Virtually any bullion dealer in the world will recognize the yellow metal and buy it from you. You can sell it to your local jewellery shop, a private party or an online dealer. It can always be sold for cash or traded for goods. Moreover, the process is much quicker and simpler than selling stocks in your brokerage account, or selling real estate.
-- Not only gold investment can be easily liquidated, but you can also mortgage them for loans. If you have gold jewellery, you need not sell them, as banks and many other financial institutions provide loan against them in times of emergency. You can get a loan within a single day in most cases based on the overall value of the gold. The banks will give back the same ornaments without any damage after you clear your loans. This is a secured loan and the interest rate on such loans will be very less when compared to general loans.
-- The reason why gold is highly valued is because it is scarce as well as finite. Fewer gold mines are being discovered today because exploration budgets are shrinking and mining costs are rising. The “easy” gold may have already been mined. With lower annual gold production and rising demand, existing gold could become even more valued in the future, giving you and your future generations a chance to earn higher returns.
-- Another reason why gold is hugely popular as an investment is because absolutely anybody can purchase it. No special skills, training or equipment, accounts or paperwork is needed to buy or recognize gold. All you need is money.
But, with all said and done, if you have decided to invest in gold, make sure it is for long term. Gold prices can be volatile in the short term, but gives steady returns over a longer period of time. There may be phases when markets witness a fall in gold prices, but they never last and gold always makes a strong comeback.
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