Most of the new/ first time and often even old investors are confused where they should invest before making an investment decision. Most of them have a lot of queries and doubts before putting their hard earned money into somewhere. There are lot of options are available like – Stocks, Real Estate, Post Office Saving, Bank Saving, Mutual Funds, ULIP (Unit Linked Insurance Policy), Fixed Deposits, Corporate Deposits ( Debentures), Gold or the Gold ETF( Gold Share)
Investing in Gold is although an old concept but it has recently taken pace due to the good returns it has delivered in the recent past and has outperformed many asset classes in the recent period, even some of the developed stock markets and Market Linked Mutual Funds. If we compare the returns on gold to the returns delivered by the Standards and Poors – S&P 500 Index (US) since 1999, gold gave a return of more than 350% whereas negative returns were delivered S&P Index.
There are many things we one needs to consider before investing into an asset. A few key factors are:-
- Expected Returns – Before investing you have to decide the average returns you are expecting from your investments, and analysing the returns on the various options available. This may be done through Fundamental Analysis or technical analysis or using other kind of studies.
- Risk Involved – Analysing the risk involved in particular asset is very important before parking you money as it may was out your invested amount completely. Generally Stock and Mutual Funds are considered more risky as compared to gold, bank deposits.
- Liquidity – Liquidity refers to the ease of disposing / selling the asset when and when you need money. The asset should be highly liquid which makes it easier for invertor to get cash when required. In this sense stocks are considered most liquid whereas fixed deposits and Real Estate are least liquid.
For first time investors who generally go for fixed deposit, Debt Instruments, we suggest to rather go for Gold or ULIP instead. Earlier, investing in gold was considered an option only for the HNI – High Networth Investors as only higher quantities like 50-100 Grams are traded, but the scenario has changed with times. Now options like Gold ETF (Exchange Traded Fund) are available in which an investor can buy in small quantity to the extent of 1Gram, which almost every investor can do. This has given a rise to a new asset class for even the small investors where they don’t have to worry about the safety of the Physical Gold and also about the quality of the metal received. Also one option available is to buy Gold Futures on the MCX or NCDEX, which is not recommendable for investors as the lot size is large and also it involves rollover costs.
Read more interesting Stock & Commodities Market Articles
Many Gold ETF’s are traded on the National Stock Exchange of India some are Gold Share (UTI), Benchmark Gold Fund etc.. It provides high liquidity to the investors along with low risk and assurance of the quality. Moreover the price is very close to the price of physical gold. We recommend first time investors to invest in Gold Share rather than going for Bank Deposits or Debt Instruments.
Related Pages :
{ 1 comment… read it below or add one }
What happens when a time comes that one gold etf starts borrowing from another etf.Is there a regulation in India that one etf cannot borrow from another.Again what are the surities that the etfs keep 90% in Gold. Is there a daily detail of this given or a monthly.How does one know that