Everyone loves owning gold. It holds both emotional and auspicious value for Indians. It is also a form of long-term investment.
Gold investment has seen high growth in the last seven years, says the CPM Group. The growth is likely to continue at an impressive rate. As published in Commodity Trade Mantra, gold prices took hits from 2012 to 2017. But over the period, its value increased exponentially. Those who kept their gold investments and jewellery will reap profits today.
Here are five things you must know before investing in gold:
1. Research is important:
It is important to research the quality of gold for your investment. Then decide whether to invest in gold bars, jewelry, or bullion gold. Today, you have many choices. Go through all of them. Choose the one that suits you the best.
Buy gold that has a (Bureau of Indian Standards) BIS hallmark. It is also important to find out the carat of gold. Higher carat indicates the purity of gold. Thus, a 24-carat gold is 99.99% pure.
2. Figure out storage:
Now, you must figure out how to store your investment. Sturdy safes and vaults are good options. So are bank lockers. Inappropriate storage is a major risk for gold. Negligence can lead to theft, and thus, a huge loss.
3. Gold as investment:
Gold may well be the safest bet during a recession. It could give relief during difficult economic situations. Also, gold provides higher liquidity in comparison to other investments. With increasing inflation, gold prices also rise. So, it provides a hedge against inflation. Historically, gold prices have seen an upward movement. In 1996, gold was Rs 5,160 per 10 grams. By 2016, gold prices had risen to Rs 28,623.
4. Rules and regulations:
The Goods and Services Tax (GST) came into effect in July this year. Now, there is a GST of 3% on gold jewellery. Earlier, a 1% excise duty and 1.5% VAT were applicable.
You also need to furnish your PAN card if your gold purchase exceeds Rs 2 lakh. The government had earlier reduced the purchase limit to Rs 50,000, but the move backfired as people started buying the precious metal illegally.
It is also important to remember that you cannot sell gold worth above Rs 10,000 in a single day. Earlier, the cash limit for sale against gold was Rs 20,000. So, plan properly if you want to liquidate your gold.
5. Digital gold
Gold Exchange-Traded Funds (ETFs) are virtual gold. You do not hold it in physical form. It is a carries a low risk of theft. You can track its growth online. When you invest money in gold ETFs, you buy gold bullion with 99.5% purity. You also save on making charges.
The future is uncertain. You need to be ready for what awaits you in future. So, it is important that you save enough and balance your portfolio. Start today, count your options, and invest. And remember to include the yellow metal in your kitty.