Invest Gold
In India, 30-35 percent of wedding expenses accounts to expenditure on gold jewellery. Gold is passed down from mothers to daughter generation after generation. It is also considered to be a financial asset kept aside for rainy day. India has been a leader among the world gold consumption. There are many options to invest including stock markets, mutual funds, fixed deposits and government bonds, but people of India prefer to invest gold as it is considered to be the safest option. In Indian Economy, currencies are issued against gold reserves amplifying the cultural value of gold further. The tangible value of gold forms the basis of real value of money.
Make way for Investment in Gold
Gold Coins and Bars
The idea is to buy coin and bars when the price is low and sell when the price is high. It is considered to be a best option if the investor is looking for long term investment. Investment in Gold through this means alone may not bear fruits in short term but plays a significant role in hedging the losses against other investments in the portfolio.
Gold Exchange Traded Funds
These funds track the price of gold and are traded in stock markets. IDBI Gold ETF, SBI Gold ETF and Birla Sun Life Gold ETF are a few examples of Indian Gold ETF trading in stock exchanges. This method eliminates the need to physically hold gold. However a certain percentage of commission and an annual storage fees is charged for holding a gold ETF.
Gold Mutual Funds (Funds of Funds)
These are open ended scheme which invest in units of Gold Exchange Traded funds on behalf of the investor. As the name suggests it a fund investing in funds and one does not need to open a demat account as is required in gold ETFs.
Equity Based Gold Funds
The funds investing in the equity of gold mining companies are known as Equity Based Gold Funds. Under this method, the returns are dependent on the performance of the fund and the equity of the companies invested in. The price of gold does not have any direct impact on them while factors like production costs, company efficiency and natural disaster also play an important role.
Real value of money would always, directly or indirectly, be dependent on the tangible value of gold. Under such a scenario, gold seems to be a safe and profit rearing investment opportunity. However, investing in gold needs long-term commitment of finance to earn good return. Gold ETF and Mutual Funds are considered to be a safer option the Equity Based Gold Funds but they all hedge against the financial stress.
