personal finance

5 functions gold serves in an investor's portfolio


5 functions gold serves in an investor’s portfolio – ​A popular hedging tool | The Economic Times

​Acts as a shield
Gold acts as a diversifying investment as it has negative correlation to stocks and other financial instruments. When a crisis such as the covid-led one weighs on financial markets, gold often comes to rescue investors as a hedge to absorb the shocks in equity, bond and oil markets.

Getty Images

​Helps tackle inflation

3/6

​Helps tackle inflation

It is a hedge against inflation as typically the value of gold rises when the cost-of-living increases.

Getty Images

​Your go-to in tough times

4/6

​Your go-to in tough times

Gold is a crisis asset and retains its value through financial and geopolitical uncertainties. Last year, gold rallied majorly when equity markets had taken a massive hit, due to the effects of the coronavirus crisis. In such times, gold indeed shines bright.

Getty Images

​Liquidity
A great advantage of gold lies in its liquidity. It is a highly liquid asset class, one can get loans against it easily too and use it to obtain urgent cash.
Read More   State pension age? Winter Fuel Payment 2019 begins this month - when is the payment date?

Getty Images

​Modes of investing
For investment purposes, there are several convenient and cost-effective ways that one can choose to invest in gold. Physical gold includes purchasing gold coins or gold bars from jewellers, banks or online stores (issued by MMTC), NBFCs etc.

Sovereign Gold Bonds (SGBs) are issued by the government of India from time to time. Whenever an issue is made, investors can subscribe.Finally one can invest via mutual funds and ETFs. Units of gold ETFs are listed on the stock exchange and one can buy units from there.

Getty Images



READ SOURCE

Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.