‘Gold’en time of the year
It’s that time of the year again, when we come together to celebrate the spirit of family and friendship. It’s also the time of the year when we indulge in spring cleaning with the motto ‘out with the old and in with the new’. The festive season in India, typically starting late October and continuing till the end of the year, is an exciting time for shoppers and retailers. Households go in for redecoration, gifts are exchanged, clothes are bought and new appliances, gadgets and even vehicles are welcomed home during this auspicious time.
This time of the year is also peppered with online shopping festivals to meet the demands of this festive cheer. This year, particularly, online shopping has almost become ubiquitous as fears of the virus keep people at home and away from offline stores. As per recent media reports, as much as 85% of the people now prefer to shop online.
The success of the on-going online shopping festivals can be attributed to the pent-up demand among people and also to people’s determination to make the festive season count and keep up traditions, virus or no virus.
Buying Gold Online
And the one act that embodies the auspiciousness of the festive season is the purchase of gold in any form. While traditionally physical forms of gold such as jewellery and gold coins are preferred, the last few years have seen a surge in demand for digital formats of gold.
Gold is always seen as a big-ticket expenditure and requires much planning. But the convenience of digital gold is that it can be purchased online, at lower ticket-sizes and in more convenient quantities.
Typically, physical gold involves making charges and comes with security concerns. Online buying of gold in the digital format does away with these as you would only be allotted digital units of gold. These units can be bought in very small quantities, unlike with physical gold. Also, the liquidity that digital gold offers is much higher as investors can redeem investments as simply and easily as withdrawing money from a bank.
Gold ETFs and Fund of Funds
In the digital format, gold can also be bought in the form of gold ETFs and gold fund of funds. Gold ETFs are mutual funds that are listed on a stock exchange. These ETFs track the price of gold in real time and their units are bought and sold, much like shares. ETFs are an efficient and convenient form of owning gold as you only buy units of the ETF and not the physical gold.
The price of physical gold will always go up in the long run. However, recently with uncertainty about global growth amid the pandemic, the demand for the yellow metal has gone up pushing prices higher. In such a scenario, buying gold ETFs can be a much cheaper way of owning gold.
For instance, one gram of physical gold today costs anywhere between Rs 4500-Rs 5000 while you can choose to invest in a gold ETF for as low as Rs 1000. For those who don’t have demat accounts, gold fund of funds can be a good investment option. These funds invest in a gold ETF and operate like a mutual fund. You invest in them via a lumpsum investment or an SIP for as low as Rs 500.
Apart from the convenience, investing in gold also adds to the diversity in your investment portfolio. A good portfolio should have an asset allocation mix that helps maximise returns and minimise risks. Gold as an asset class offers a good overall hedge to portfolio against various risks such as inflation and risks posed by other asset classes like equity and debt. Gold is also a good bet against geopolitical risks. Whether it’s a pandemic or a trade-conflict or an unexpected swing in oil prices, it’s gold to the rescue for most countries, keeping the demand for the yellow metal high at all times.
For Indians, gold should be a tradition, an indulgence and an investment all rolled into one. Its part of a family’s heritage and is a sign of its prosperity and progress. So, while you celebrate and splurge on high-end fashion, gadgets and LED TVs, spare some money to invest in digital gold and splurge on your future too.