Dhantrayodashi, popularly known as Dhanteras ushers in the Diwali celebration in India. Apart from the offerings of puja on this day, this day is traditionally considered auspicious for investment.
The focus is, of course, investing in precious metals such as gold and silver. However, nowadays, investing in other assets is also gaining popularity.
These days, gold shops are open overnight and the craze for buying gold is massive. There are long queues in front of them where buyers wait very patiently.
Although investing in gold in metallic form has a traditional appeal, there are also other ways of investing in gold.
Let’s look at some of these ways and other popular investment options this Dhanteras which can shower the blessings of Goddess Lakshmi on you.
Investing in Gold in Various Ways
Although investing in gold in the metallic form — gold ornaments, coins, bars, or biscuits — are still very popular but certain disadvantages have made investors look for other options. There is often a question mark on the purity of physical gold, and they are subject to theft and loss without proper safekeeping.
Digital gold, gold ETF, gold mutual funds, and Sovereign Gold Bond issued by the RBI on behalf of the Government of India, overcome the above problems and are being increasingly popular.
Sovereign Gold Bond is probably the best way of investing in gold online. There is a sovereign guarantee and it earns an interest of 2.5% of the invested capital. Interest and capital appreciation are tax-free.
Investing in gold is a great hedge against inflation; it offers liquidity and capacity to take a loan against gold.
Investing in Fixed Income Instruments
Investing in fixed income instruments such as bank fixed deposits, government bonds, and debt mutual funds are surely lucrative as it provides visibility and stability of returns. It is a great option for those who are averse to volatility like senior citizens.
However, almost all fixed income instruments fail to beat inflation the real value of investment deteriorates over time. Moreover, currently, we are at the lowest end of the interest rate cycle. Locking up the money now at low interest is not going to be lucrative.
However, it is always advisable to park a part of your savings in fixed income instruments. At least, there is no chance of loss of the principal and in an emergency, such instruments can be encashed reasonably fast.
Stock Market and Mutual Funds
Stock market investment can be highly rewarding if you have the required knowledge, skill, and temperament. Stock market investment is really for the long term but the returns are volatile in the short term. Often, investments suffer from value erosion in the short term for a variety of factors.
Investing in stocks needs devotion of a substantial amount of time in studying companies’ annual reports, listening to management con-calls, and a host of other factors like the economy. Over the long term, stock market investments are likely to beat inflation.
It is much better to invest passively in an index fund or in mutual funds of your choice. Initiating a systematic investment plan (SIP) is the best way to do it.
Investment in Properties
The corpus required for investing in real estate is larger compared to the above. However, home loans, now with the lowest interest in a decade, can come to your rescue.
As the interest rate is cyclical, it is not expected that the interest rate will remain low forever. The opportunity of buying a property with a home loan at the cusp of the interest rate cycle is slowly ending.
Over a long period of time, investing in real estate can be highly rewarding. As India develops, land prices are increasingly at a premium in its cities. Moreover, urban development is steadily increasing the price of properties and any chance of capital loss is actually non-existent.
Apart from the above factor, real estate is the only asset class that can offer a sense of security, and the opportunity to use the property for personal stay is also there.
Real estate can be used also to earn a rental income. No other asset class can offer such a benefit too.
If we look at the pros and cons of different asset classes, we can safely assume that real estate has definite advantages over the other options.
