All That Glitters Is Not Gold

Most of us are usually confused whether to invest in a mutual fund or invest in gold which our parents keep telling is an asset. Investment in gold has its pros and cons.

The positives of investing in gold:

• Gold plays a very important role in Indian culture and society and has been considered an asset through time immemorial.
  
• The liquidity factor of this asset also entices the investors, given the high volatile nature of equity market.
  
• Possession of gold more than three years can gain you tax advantages.
  

The negatives of investing in gold:

• The price of this asset fluctuates with the demand- supply balances.


• In order to make profit from investing in gold one needs to buy it at a lower price and sell it at a higher price.


• Long-term returns from holding gold compared to investing in equities or fixed deposits have been poor.

So, investing in gold has its advantages as well as disadvantages. But the decision criteria should be the amount of investment. If invested rightly investment in gold may surely be better than a fixed deposit. Again, one doesn’t get any dividends or interests by investing in gold.

The price of gold has reached an all-time high and its better to avoid buying gold now but given that the price of gold is going up internationally, it’s the best time to sell off any gold that you want to.



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