Investment in Gold

Before proceeding further let us answer a basic question in our mind. Why to invest in gold? Should I invest in gold? Is gold a good investment option?

It is your hard earned money. So you need to answer these questions before investing in gold. Why do people invest in Gold? What are all the benefits of investing in gold?

There are 2 primary reasons why you need to invest in gold.

  • Investing money in gold is worth because it is a hedge against inflation. Over a period of time, the return on gold investment is in line with the rate of inflation.
  • It is worth investing in gold for a one more very valid reason. That is gold is negatively correlated to equity investments. Say for example 2007 onwards, the equity markets started performing poorly whereas the gold has performed well. So having gold as an investment option in your portfolio mix will help you reduce the overall volatility of your portfolio.

The above 2 points could have given some answers to your question "Is buying gold a good investment?"

Return on gold investment:

Is it profitable to invest in gold?

This investment proved remarkable from 2006 to 2011.During that time span Gold has given average return of 29% per annum which was any day better than other investment options.

However, the long term average return on gold investment is less than 10% p.a.

As one can say technically or ironically but history always repeats itself. Therefore, we may once again observe the similar less than 10% appreciation pattern in gold prices in near future.

Still, if you want to invest in Gold and cannot resist yourself from the temptation then these are few types of gold investment:

  • Jewellery Buying
  • Investment in Gold coins and bars
  • Gold ETF
  • Gold Fund of Funds
  • Equity based Gold Funds

Is it right time to invest in gold?

Many times I have faced questions similar to "When to invest in gold?" or "Should I invest in gold now?" There is no right or wrong time to invest in gold. You need to invest in gold for long term (5+yrs). It is better to stagger your investments over a period of time to average out the cost of purchase.

How to start investing in Gold online?

You can start investing in gold online either by investing in gold ETF or by investing in gold funds. Gold funds can also be bought online just like investing in other mutual funds online.