Is Investing In Physical Gold The Best Choice For Women? Probably Not – Forbes Advisor INDIA

Women in India are quite keen to purchase gold jewelry during festive seasons. This excitement is clubbed with the wonderful opportunity to invest in a safe haven. With the advent of multiple ways to invest in gold, the festive season is a good time to evaluate if buying physical gold is the best option available.

This guide details ample reasons for Indian women to reconsider investing in gold jewelry due to challenges like impurities, storage, etc. Additional factors that can make women rethink their investment in physical gold are their making charges, purchasing gold is expensive and added to it are the making charges.

Here are reasons why women should reconsider buying physical gold as an investment option.

Some Advantages of Buying Physical Gold as Compared to Other Ways

Protection Against Inflation

During inflation, money loses its value and these are the times when you wonder if investing in gold rather than money would have been a wise choice. Investing in physical old or other safe assets will serve as a shield and protect you from the risk of inflation. It has been observed that gold has been outperforming the inflation rate over the years and by saving in gold you will reduce your risk by a higher margin. 

Easy to Purchase And Sell

You can easily purchase physical gold from your local jewelry store. However, make sure you purchase the jewelry from trusted jewelers who can provide you with a guarantee certificate. Even banks sell you gold coins. The biggest benefit of purchasing from reputed sources is that you will get pure quality with a receipt for future reference without any risk. 

Maintenance

Physical gold does not need maintenance. You can purchase a yellow metal and keep it in a safe place or locker for years without the need for maintenance. Imagine if you invest in a property or money, you will constantly need to maintain it, unlike physical gold. 

Loan

In desperate times, physical gold will always make you feel stable enough to face any financial problems. This is because gold investment easily liquidates in the market. Banks and other financial institutions give loans on behalf of your gold ornaments. After you clear the loan, the bank will give you your physical gold without any damage. 

Does Not Deteriorate With Time

Physical gold will not deteriorate with time. If you invest in a property or a vehicle, it loses its value over time. This is not the case in physical gold, as it will not deteriorate due to its age or if the gold ornaments are outdated in design. The current market value of gold will be the same in any case when it comes to physical gold. So, gold is a gold investment with great returns. 

Reasons Why Physical Gold May Not Be Your Best Bet

Impurities

There is a possible purity issue when it comes to purchasing physical gold. If your yellow metal does not have a BIS (Bureau of Indian Standards) Hallmark tag, it is hard to find out whether the physical gold you purchase is pure gold or fake. This can cause problems when you try to sell your yellow metal and do not get expected returns. So, it is important for you to check a BIS hallmark tag before buying gold jewelry. 

Storage and Safety

Purchasing gold jewelry not only requires a lot of money but also requires a safe space to store it. Either you can keep it in a bank or a locker, to slim the chances of it being robbed or stolen. Apart from its safety, buying a yellow metal requires you to make extra making charges if you want the gold jewelry to be customized according to your design and making charges are not returnable. 

Additional Charges for Storage 

Investing in gold can seem like the best option. But, gold ornaments are expensive and on top of that there are hidden charges added to it and if that’s not enough there is constant worry of it being stolen. Even if you opt for a locker system in a bank they charge you with the locker rent. Let us see the rent offered by the State Bank of India for their lockers.

Lack of Interest

Now, let us understand investment calculation, if you purchase a gold item and deposit it in a bank then the rate of interest according to the State Bank of India is:

Now, let us see saving bank deposit interest rates according to the State Bank of India:

As you can see the rate of interest is quite low when you deposit yellow metal in the bank, rather than the money. The benefit of investing in physical gold is the rising value of gold.

Note: STBD implies the short-term bank deposit

Liquidity

Investing in physical gold is not just an asset investment value but also has attached sentiments to it. Like, it’s a legacy that a person or family wants to pass from generation to generation. Adding an emotional value to a piece of jewelry can make it difficult for people to exchange it in need of money. 

Different Ways to Invest in Gold Instead of Physical Gold

The above segment highlights the drawbacks of investing in physical gold, but there are some alternatives you can invest in instead of yellow metals. Let us see that.

Digital Gold

Customers can invest in digital gold from as low as INR 1. You can purchase digital gold with the help of payment apps like Google Pay, PhonePe and Paytm. These payment apps have collaborated with Metals and Minerals Trading Corporation of India (MMTC) – PAMP which is a joint venture between sector (MMTC) and Switzerland’s PAMP Produits Artistiques Métaux Précieux in French SA or SafeGold to sell gold. 

Sovereign Gold Bonds

Sovereign gold bonds are one of the most secure and best ways to invest in gold. The Reserve Bank of India (RBI) issues these bonds and represents grams of physical gold. SGBs can be bought from banks, StockHolding Corporations of India, post offices and authorized stock exchanges in India. You can invest a minimum of one gram quantity in SGBs. 

Gold ETFs

Gold Exchange Traded Funds (ETFs) are mutual funds that also keep track of the local price of physical gold. Investors can invest in Gold ETFs without any hassle. The invested money is utilized by these mutual fund companies to purchase gold bullion. Investors can purchase and sell them on the same day as they are listed on the stock exchange. 

Also know why digital gold is a wise investment during the festival season.