Portfolio management: 5 reasons why gold is pillar of sustainable savings


Portfolio management: In today’s volatile economic environment, it’s important for an investor to put money in stable and secure saving instruments. However, to have a sustained portfolio, one should diversify one’s investment instruments in such a way that it goes on to beat the average rat of inflation. Amid concerns of soaring inflation, a recession in the US could impact growth in India in the medium term. Businesses are bound may also get affected, and as a result, the stock market might come under the sell-off heat. While people with long-term financial goals should ‘buy the dip’ the same can not be said for those who are trying to build life savings. In such scenario, having gold in one’s portfolio is expected to give a sustainable support to one’s money.

Here we list out top 5 reasons why gold is essential for a sustainable growth to one’s portfolio:

1] No need for financial expertise: “Unlike stocks and mutual funds, gold don’t require much financial expertise. Indians have been putting their savings in gold for literally thousands of years now. Gold is a metal that was used for making coins in ancient kingdoms. It has been passed on as generational wealth in the form of jewelry. Rich or poor, an individual or a nation, everyone inherently understands the value of gold,” said Sousthav Chakrabarty, Founder & CEO at Siply.

2] High liquid option: While building a savings portfolio, it is extremely important to consider how much of your portfolio is liquid. Liquidity refers to the ability to convert your financial asset into cash at any point. Investing in gold ETF and digital gold gives an investor to have higher level of liquidity in one’s portfolio as it can be bought and sold in a single click without roaming from pillar tom post.

“Gold as a digital asset provides numerous benefits in the current times where Indians are accustomed to investing with a click-of-a-button for the quick-buck – convenient and instant purchase/sale in bite-sized quantities; nil hassle-free making charges, no hindrance of storing physical gold, assurance of gold authenticity as it is certified by government-licensed agencies and highly liquid in nature, the investor can easily buy/sell units anytime, anywhere,” said Abhijit Shukla, CEO & Director at Tarality.

3] Cost effective options: “Being a strategic investment asset, Gold ETF is cost-effective as compared to physical gold. Best utilised during unprecedented current times, Gold ETFs provide diversification from Equity Holdings. Moreover, Gold ETFs are a hedge against a falling economy, owing to the prices going up when interest rate goes down. Known to be classified as non-equity products, Gold ETFs do not attract Securities Transaction Tax – STT is only imposed by default on equity and equity products – improving the redemption yield on Gold ETFs,” said Palka Arora Chopra, Senior Vice President at MasterTrust.

4] Savings available from Re 1: “No matter what your financial situation is, savings for a gold investor don’t need to stop. With a good number of micro savings apps in the market, users can start saving in gold with as little as Re 1. They can choose how much money they want to put in gold every day, week and month. Over the time, each rupee adds up, and one can end up with a sizable amount of gold against its name. Gold, a stable and secure saving asset, helps you with long-term wealth creation at a very accessible monthly cost,” said Sousthav Chakrabarty of Siply.

5] Return on gold beats inflation: “Gold has given CAGR of near 10 per cent since 1971. It has outperformed a number of investment and savings options – from US treasury bonds to commodities and developed market equities. Even when currencies depreciate, gold remains a reliable store of value. Countries across the world hold gold reserves as a means to protect against inflation, deflation and other economic disasters,” said Siply expert.

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