In India, the investment habit is witnessing an upward trend. A wide array of investment options coupled with access to the educational resources have helped investors broaden their portfolio and invest right.
However, even with so many investing tools, gold is one of the oldest and most preferred investment choices for Indians.
Gold has seen a strong rally in the last few years, rising around 25% in calendar year 2023 and around 12% in 2024 so far.
This explains the sudden rise in interest in gold as an investment option.
There are several reasons why investing in gold is, and will always be, a good option:
Preserving wealth in the face of inflation
"Investing in gold serves as a hedge against inflation," said Kavitha Subramanian, Co-Founder of Upstox
As inflation erodes the purchasing power of currency, gold stands as a reliable store of value over time. Throughout history, gold has demonstrated its resilience, maintaining its worth while fiat currencies fluctuate.
"This characteristic makes gold an essential component of any diversified investment portfolio, offering stability amid economic uncertainties," Subramanian added.
Mitigating portfolio volatility
Subramanian emphasised that gold presents relatively lower risks compared to other assets.
Its value is not intricately tied to the performance of companies or economic indicators, making it less susceptible to market fluctuations.
"Gold acts as a safeguard, ensuring that the overall value of the portfolio remains intact even when other assets experience volatility," she said.
This stability makes gold an attractive option for investors seeking to mitigate risk and maintain a balanced portfolio.
Liquidity and accessibility
Another key advantage of gold is its high liquidity.
"Gold can be quickly and easily converted into cash as needed," Subramanian highlighted.
This liquidity provides investors with flexibility and peace of mind, knowing that their assets can be readily accessed in times of financial need or market turmoil.
Whether through sovereign gold bonds, gold ETFs, or gold mutual funds, investors have multiple avenues to tap into the gold market, enhancing accessibility and convenience.
Navigating the gold market
For beginners, it is essential to understand the gold market: Start small, diversify, and view investing in gold as a long-term investment.
By understanding their investment objectives, timeframes, and market trends, investors can make informed decisions that align with their financial goals.
"Whether seeking wealth preservation, portfolio diversification, or capital appreciation, gold offers a versatile investment option suitable for various strategies and risk profiles," Subramanian said.
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