This is one hot question in 2021, Gold has always been the meaning of savings or investment in Indian middle class families which are a big chunk of Indian population. Now we are in 2021 new generation is introduced to various investment opportunities like stock market, mutual funds and this whole new crypto which people are taking as investments, I personally doubt if it is an investment actually. So after having exposure of so many investment opportunities majority of people have this question in their head that is Gold or jewellery still a good investment in 2021? Yes or No is not the best way to answer this question so what we did is we have presented some pros and cons of investing in gold in 2021 and after going through those, you can have a clear picture in your head about if gold is a good investment for you or not.
Jewellery or Gold?
Before we get to the pros and cons we thought to clear this doubt, A lot of households in India invest in gold in the form of jewellery but now this number is going down because according to a report from the financial express 76% of urban investors preferred to invest in gold in the form of gold bars and coins etc rather then acquiring jewellery. This is absolutely a personal choice and the current trend is gold bars or coins so you can decide accordingly.
Gold or Jewellery as an investment in 2021?
As mentioned above we are going to share some pros and cons as there is no absolute answer to this question, the answer will vary from person to person. So starting with some pros or advantages of investing in gold.
Reasons to invest in Gold
Gold is something which is valuable and trusted world wide and has a history of thousands of years, this is not something new or flashy object of the market. Holding gold as an investment or savings is being done from decades and it has maintained its value. Gold has been used as a currency, wealth signal so here are some factors why you should be investing in gold or jewellery.
Trusted Wealth Signal
Its history backs its trust value and gold has an international image of a wealth which makes it more reliable and trustworthy. Keeping money in savings account is never ever a good idea because if you have 50K. INR in your bank after a few years its value will only depreciate because of the inflation but at the same time you have 50K worth gold there’s a high probability that the value will rise as it has a history of rising value.
Value or prices of gold have seen appriciation even when the inflation is also rising and value of USD is going down. In a bigger picture Gold maintains its value or even appreciates its value even when the most powerful currency get to see downfalls.
Stability and not directly impacted
A lot of investment opportunities has direct impacted of factors like interest rate decisions, etc. Incase of gold it is not true, it is maintaining its value from a very long time which is why it is considered safe by some very big investors as well. People feel safe investing in gold as risk taking is something which is not preferred by majority.
Liquidity of Gold
Liquidity of gold is one big reason because of which it is preferred by Indian households. Whenever you need cash it is a very simple and easy processor instantly convert that gold into cash and now people can avail loans on the basis of their gold as wel.
These are some of the major reasons why majority of people in india consider gold as their basic investment ( note – we are not considering the emotional or status based factors which also plays an important role ) now lets talk about some cons of investing in gold in 2021.
Reasons to think before investing in Gold
It is not always profitable
Just like stock market gold also have price corrections which can also lead to losses so the mentality of avg middle class Indian of taking gold as a profitable investment always is wrong.
Profit income only
Gold can not generate a passive income like other investment opportunities like interest and dividends on stocks and bonds. It is a one time profit income when sold in the market.
Cost of storage and safety
Gold being a precious metal needs a safe place for storage which is most commonly referred as a bank locker in India. Now the Bank locker also has its own cost for providing that safe environment to store your gold, customers are bound to pay for the locker on yearly basis.
The best way out would be diversifying your investments, although it is good to play safe but risks also comes with potential gains so the best way of investing would be diversifying your investments in multiple assets one of which can be gold, now what percentage of it should be gold is something which depends on various factors and it required a specific article to talk about it. So we would come up with that article some other day, make sure to stay tuned and drop down your questions in the comment section below.