5 reasons why you should go for investments instead of gold, this Gudi Padwa

Jul 03, 2018 | 4 months ago | Read Time: 3 minutes | By iKnowledge Team

Gudi Padwa and purchasing gold go together year after year. But, smart investors have now moved on from gold to investing in their name. And for good reason. Options like Gold Exchange Traded Funds (ETFs) or equities, stocks or even unit-linked insurance plans (ULIPs) can be an alternative to keeping physical gold at home.

Most people used to place their trust in traditional assets such as Fixed Deposits (FDs) or Recurring Deposits. In some cases, monthly saving funds or schemes offered by their local jeweller or as suggested by a neighbour may have been their only choice.

Such local funds are not monitored by a regulating body and moreover local chit funds have had a suspect reputation attached to them. These options are unwise due to their unregulated, opaque and unreliable past records.

That’s why equity investments are better than purchase of gold, here are reasons why you should invest your money rather than buy gold this Gudi Padwa are:

Long-Term Returns

Unlike gold, investments in equities or mutual funds or even life insurance such as iInvest from Aegon Life offer good returns over a period. When you purchase gold, it holds no potential unless sold off. But, equity investments can be started with a small capital, unlike buying gold. The low capital investment is what makes equities accessible and attractive to the masses.

Value of Asset

Gold value isn’t volatile enough for significant earnings. While the value of gold fluctuates daily, you do not stand to benefit from it daily. The value of the assets that you would own in an investment changes too. But their scope for earnings is more than gold, unless you have a heavy gold investment. Equities, for example, can be traded easily and have better returns for you. But, investment planning is important. You need to have a good understanding of the market before you start investment. A few weeks of research can go a long way in helping you.

Liquidity

Gold doesn’t provide you the liquidity that equity investments offer. You can buy and sell shares at the touch of a button. But it is not that easy when it comes buying or selling gold. You will first need to go to a jeweller or someone who purchases gold. After having weighed it, you receive the money in exchange, post the deductions, fees, and not to forget taxes and other hidden charges at the mercy of the jeweller that ultimately negates the very purpose of gaining profit. Trading with equity, however, is easy, effortless and transparent.

Efficiency

Gold may give you the satisfaction that you have a tangible asset ready to be disposed when needed. But there are downsides to this too. Holding gold in your home can be risky due to safety issues. Investments in funds may be virtual assets, but their purchase and sale are as easy as the transactions of physical gold.

Tax Benefits

Purchasing and having gold in your home will not get you any tax benefits. But some types of investments can benefit you, like insurance. Under Section 80D, insurance premiums provide you tax relief. On the other hand, equity or unit-linked insurance plans such as iInvest from Aegon Life increase your wealth faster over a long time due to compounding effect, capital appreciation, tax benefits and dividend income.

Conclusion

When you buy a stock, or invest in a company, their financial growth can make you money. As an investor, everything that the company earns is shared with you. The company’s prosperity adds to your financial growth. But since these investments are market-linked, there are lows too. When you choose to trade, be aware of the market before you make any purchase or sale. This Gudi Padwa, make a smart choice and turn to investments rather than gold.

Advt. no.: IA/Jun 2018/4151


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