With Diwali around the corner, it is the season for Indians to buy gold for gifting and religious purposes. However, with gold prices crossing Rs 60,000 per 10 gm in the country in the last week, consumers might be a little cautious about purchasing gold. While gold is a popular choice amongst Indian women, it has many more advantages in addition to it’s beauty. So if you are considering buying gold this Diwali and feeling doubtful because of the high prices, let’s take a look at the top five reasons why gold is a good investment for anyone.
Protection Against Inflation
Inflation is a major threat to investments in the long run. Inflation represents the overall increase in prices, which indicates the reduction in the purchasing power of money. Savings with a fixed payout might not be able to keep up with the inflation rate, thus effectively reducing the return you should get on these savings. This is why savings in the form of cash is a depreciating asset as inflation will erode the value your money holds over time. For instance, if you can buy a piece of chocolate today for Rs 10, the price of the same chocolate could increase to Rs 20 next year. While the price of chocolate increased over the period of a year, if you kept your savings in fixed investments, like cash, the value of that saving remained the same. Therefore, the purchasing power of your money decreased because it couldn’t keep up with the inflation in the economy. To protect your investments from this, one should diversify their portfolios and opt for safe assets like gold which has proved over the years that it can outperform the inflation rate.
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Liquidity
Liquidity represents the ease with which you can sell an asset for cash at the current market value. For instance, money in the form of cash is highly liquid as it is available to you for withdrawal at any time. On the other hand, real estate is low in liquidity because it can take you a long time to sell your property and receive it’s value in cash terms. In this regard, gold is considered a favourite in investment because of it’s high liquidity. It is very easy for anyone today to go and purchase and sell gold without having any technical knowledge about it. This is why Indian women for decades, have preferred buying gold to secure a financially stable future for themselves. While it is possible to buy gold from any jeweller in the market, it is advisable to go to a reputed one to ensure you get the best quality of unadulterated gold.
Easy To Maintain
A major advantage of gold as an investment lies in the ease with which this asset can be maintained by anyone. If you have invested in real estate, you might have to worry about it’s upkeep and security, while investment in the stock market requires a lot of technical knowledge and understanding of the daily movements of the market. Gold, on the other hand, is relatively simple to manage as an investment. All you need to do is keep it in a locker at home or the bank, without having to bother about it for a long time.
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Financial Planning
Gold gives people an easy avenue to start their financial planning and save for the future without worrying about the technicalities of the investment. Often people get overwhelmed by the complexities involved in investing money in real estate, stock market, or new investment avenues like digital currencies. Gold provides a simple outlet for reliable investment for people of all backgrounds and is also a good way of planning for future expenses such as education, weddings, etc.
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Easy Collateral
In addition to generating wealth on it’s own, gold is also a simple way for individuals to get access to credit as many financial institutions today provide loans against gold. The reliability of the asset and it’s durability make it a favourable collateral for lenders to give credit against. Further, in emergency situations, gold can come in handy to get credit easily and quickly to help you face the event without having to worry about arranging money in such urgent circumstances.