Investment guide: Buy gold or invest in mutual funds?
New Delhi : There can be 'n' number of ways a man can use his savings to grow it on its own. Spending money wisely and investing the remainder in good schemes can do wonder for individuals.
When it comes to investment, people often tend to buy gold; but, considering its lost glitter of generating wealth and sceptical performance, people have started looking for better options.
The yellow metal has always been viewed as a passive investment. People assume that value of gold would appreciate in future and hold on to it, but earn poor returns.
Comparison in last 15 years
Gold in India cost around Rs 5,600 in 2003, while BSE Sensex was at the level of 4231.69. At present, the value of 10 gram gold is Rs 30,500 while Sensex is at an all-time high of 38,000. In 15 years, gold has appreciated 5.4 times since 2003, while Sensex grew nearly 10 times.
Other investment option
Mutual Funds is turning out to be one of the favourite choices these days by the people.
According to Jay Gandhi, analyst with HDFC Securities: "As millennial form a higher percentage of population, the attachment to physical investment is reducing, indicating a change in the millennial psychology. Around 75 per cent of jewellery purchases are made by people in rural areas. As they would migrate to urban areas they would want assets to be light, which would further reduce the demand for gold, but this is a 20-30-year long journey."
"An equity person would never invest in gold — the reason is the opportunity cost. In the last 10 years, the price of gold has gone nowhere with an average inflation close to 7.5 per cent, gold has provided a CAGR of just 9 per cent. Whereas any decent mutual fund has given CAGR upwards of 15 per cent." Jay said.