Gold: Investment or Protection ?

Gold: Investment or Protection?

In Indian culture, gold is considered as personal wealth, so many people buy gold jewellery on any wedding, birth of a child or any auspicious occasion.

Advantages of investing in gold

1.     Safety

The value of gold remains stable for a long time. Gold does not crash even when the market is down.

2.     Protection against inflation

When the market (inflation) increases, gold also becomes more expensive. So even if the value of money goes down, the value of gold remains safe.

3.     Liquidity

You can sell gold at any time to get immediate money.

Disadvantages of gold

1.     Returns are not stable

The price of gold can remain stable for a long time.

2.     There are no active earnings.

If you buy physical gold, then making charges / GST increase, That means the actual return decreases.

3.     It is a passive asset.

Gold does not “grow” like a business or stock. Only the value changes.

How much to invest in gold?

Keep 10% to 15% of your total investment in gold, not more, otherwise growth will slow down.

Summary:

| If you want safety → Yes, Gold is good

| If you want fast return → Business / Mutual Fund / Equity is better

Gold protects wealth, Business / Equity grows wealth, gold works more as an insurance (Insurance / Safety Cover) than an investment.

Gold does not increase money, but preserves the value of money.

When:

• Market goes down

• Business does not give profit

• Inflation increases

• Economy becomes unstable

Then the value of gold increases or at least remains stable.

So gold is not a growth asset, but a protection asset.