India is one of the world's largest gold consumers and the Indian fondness for gold has never faded. Gold, in fact, is the most desired commodity, whether it is for a religious celebration, an important event or a marriage in the family. Some are in the habit of holding gold as a safe haven to be used for generating emergency funds. We have always maintained gold in our portfolio, usually in physical form in our lockers, whether as a means of embellishment or as an investment instrument, or possibly both. Though gold has delivered negative returns of 4.8 percent in the last one year, in 2020 it delivered returns close to 26 percent. It is observed that even though gold experiences spectacular years, staying dormant for a long period is its trait.
However, it does help you hedge against inflation and this is evident with the compounded annual growth rate (CAGR) of gold prices being around 8 percent over the past 51 years. What has changed over the years is that gold is no longer just a physical asset but also something that one can invest in digitally. As such, investing in gold can mean gold jewelry, gold coins, and bars or even digital gold. Even when investing digitally, there are gold exchange-traded funds (ETFs), gold mutual funds, and sovereign gold bonds (SGBs) to consider. The only stumbling block that has not popularised digital investment in gold is the lack of awareness and the feeling of insecurity. In this article, we will determine if it is worthwhile to invest in SGBs.
Investing in Gold
Gold Jewellery
One of the classic methods in which Indians invest in gold is through gold jewellery. Because gold is seen as a prestige symbol, many individuals like wearing gold jewellery. They buy gold jewellery, wear it on a daily basis or during religious or family events, and then sell it if they want to create a new adornment or if they are short on funds.
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