The Best Material For Investing
Gold gives a sense of security as a material unlike many other financial products that are intangible. Gold prices are purely determined by supply and demand and to a lesser extent, to fluctuations. There are many proven benefits of having gold as an investment:
• Safety: In unstable and uncertain times (as seen in recent years due to decay) Gold provides safe haven, because there is no risk of default. Gold has its own intrinsic value.
• Brings diversification and stability in the portfolio: the forces acting on gold differ from those acting on other financial assets. Most of the time, it is negatively correlated with stocks and bonds.
• Marketable and portable: gold, can be easily converted into cash and vice versa, the prices at the international level, defined.
• a means to combat inflation: Regardless of the market cycles of the purchasing power of gold remains intact over a long period of time. It is better to keep your cash in the form of gold.
• Less regulatory intervention: You do not have elaborate rules disclosure of information on gold, as for many other classes of assets. Gold can be a very private investment.
Diwali is an auspicious time for buying gold and should be used wisely to invest. But there are many ways to invest and it can be a daunting task. Let’s look at the pros and cons of the options you have:
Decorations: This is one of the oldest forms of investment, which also has a certain amount of pride and honor given to Indian families. This is something that you can use and enjoy, but at the same time it keeps appreciating value. But the price usually jewelry is marked anywhere from 20 to 200% depending on the complexity of the design. This makes it unattractive as investments.
Gold bars and coins: gold coins and bars are becoming more popular not only investment but also as gifts. But they must be physically stored, which can be a nightmare for security. You may have to incur additional costs to rent a locker bank or insurance for your possessions. Moreover, you should be careful of fraudulent and counterfeit Ones. There may be a significant difference between the buying and selling rate of gold coins and ingots.
Electronically traded funds: Better known as ETFs are open systems, mutual fund, which invest the money, collected from investors in standard gold bullion (0.995 purity). Holding an investor is denoted in units, which are traded on the stock market as shares. It is expressed as a NAV (Net Asset Value), which represents the price of one unit (equivalent to 1 gram of gold) on this day.
They have many advantages ETFs Vis-à-VIS physical gold when viewed from investment perspective:
A. No need to worry about security and storage
B. No need to worry about the quality of gold
C. No need to worry about resale, as the exchange provides a comfortable liquidity (and shares)
D. No charge
E. You can invest very small amounts of money (at least 1 unit), which is not possible in the case of jewelry and coins / bars.
F. No property tax. Long Term Capital gains only after 1 year, whereas it is 3 years in case of physical gold.
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