Gold is a traditional form of investment. Investing in gold offers a lot of benefits and is known to safeguard your investment for a long period of time. Gold is a hedge against inflation. Listed below are 10 benefits on why an investment in gold is an ideal option for investors:
1. Gold Is Money: Unlike cash, physical gold cannot be used for transactions and payments, but it’s fairly liquid. Since ancient times gold has maintained its market value and has been used by households to pass on their wealth to the next generation. Gold is highly liquid and can be easily converted into cash without any documentation.
2. Gold Is a Tangible Asset: Gold is a physical asset. Gold is one of those assets that can be passed on through generations, without being affected by time. As gold is tangible, it doesn’t bear the risk that comes with paper money/certificates.
3. Gold Has No Counterparty Risk: Gold can be purchased at gold jewelry shops. Its weight is in grams or kilograms and purity is measured in karats. Gold coins are an ideal investment for people who purchase gold. Purchasing gold does not require much documentation and can be easily availed by paying with cash or debit/credit card. A middleman or agent is not necessary while purchasing gold.
4. Gold Can Be Private and Confidential: Gold investments can be anonymous and you do not need to file tax returns or pay TDS on the gold investment. After the implementation of GST, the government has made it mandatory to provide PAN card details for purchasing gold above a certain limit.
5. Gold is Liquid and Portable: Gold is a highly liquid asset. It can be easily converted into cash by selling it at a jewelry shop. It doesn’t require much documentation and there’s no waiting period. Gold coins can easily be carried around.
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6. Gold Is Easy to Store and Comes With Low Maintenance and Carrying Costs: Gold is easier to maintain than real estate. Gold can be stored at bank vaults. To avail this facility, you must have a saving account at the bank. The vault charges are deducted on an annual basis from your savings account. The charges are quite low for the facility.
Unlike gold, maintaining real estate is costly as it entails various charges like repairing cost, painting cost, paying taxes and maintenance fees. Gold is value-dense which means it can pack a lot of value within a small space.
7. Best Supplement to the Stock Market and Real Estate Investment: Investing in real estate and stock markets are great and you can get better returns. However, the stock market is quite volatile and is subject to market risk. You end up with heavy losses if the stock market crashes.
Real estate offers good returns but has high maintenance costs. So, instead of investing all your money on real estate or the stock markets, you must have some of your investments in gold to balance the investment portfolio. Gold rarely crashes and helps maintain the investment.
8. Used in portfolio Diversification: Gold is one of the best investment options for people who want to diversify the portfolio. A diverse portfolio includes certain investments that are not related to each other. A diverse portfolio helps investors retain yields when some of their investments are fetching low returns. Gold has good market value and it keeps your investments safe. Gold investment helps investors recover from a stock market crash as it is negatively correlated to the stock markets.
9. Gold Hedges Your Stock Market Investments: Gold is a perfect hedge against inflation. The value of gold rises with the rise in the cost of living. Factors like cost of living and supply constraints assist in the price rise of gold and over a period of time, the returns you get from this investment are in-line with inflation.
SEE ALSO: Why Do People Invest In Gold?
10. Gold Performance During Stock Market Crashes: Investing in gold helps you stay afloat during periods of inflation. Historically, the prices of gold have increased whenever there is a fall in the stock markets. Gold proves to be a life saver for investors when their other investments like shares and mutual funds do not yield profits.
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