If you are in your 20s or 30s, you are what we call the ‘millennial generation’ – Gen Y or even Gen Z perhaps. Look at your investment portfolio and you may see a high amount of equity or equity funds. Being young, in your prime earning and risk taking years; this may seem like a great choice, but are you missing out on something ?
How many of you have found yourself mocking your parent’s choice of gold as an investment? You believe they are just wasting away in a locker somewhere and an unnecessary investment in today’s digital age? Well then you are not alone, a recent survey found that only 8% of millennials chose Gold as an investing preference¹.

But there is a lot more to investing in gold than the physical sheen that you see.

Gold has proven itself through time!

Let’s take a look at the gold prices, around 20 years ago when your parents would have invested in it. From a mere Rs. 4400 in 2000² to nearly Rs.51,000 (Rs.50,890³ as on 30th June 2022); gold has grown at a considerable double digit – 11.50% CAGR in this time period⁴!

Times change but basic financial needs do not

Our financial goals and aspirations change through generations, but certain basic financial needs remain the same. No matter what age you are or what stage you are in life, you still need financial safety – a go-to investment that you can rely on in tough times!

Gold’s physical properties – durability, non-corrosive and limited supply; make it a significant store of value. Gold has also proven its might in crisis times – be it a financial crisis, a political crisis or a health pandemic – gold has earned positive returns even when other asset classes have weakened!

While the world witnessed a financial crisis in 2008, Gold earned a return of 30.6% in India, while both domestic and international equity earned negative returns (-57% and -26% respectively)5

Other features

Gold investing comes with a plethora of other features. potential to Hedge against risk of inflation - tends to earn returns that exceed inflation rates over the long term (11.50% over 22+ years vis-à-vis average inflation of 6.13%⁶)

• High liquidity – has high demand in the market making it easier to buy and sell

• Stability – gold has timeless properties and tends to be less volatile than other high-risk asset classes (from CY 2018 to CY 2020, NIFTY 50 had high volatility with CAGR of 10% while gold had CAGR of 19% for same period)⁷

• Can be monetised through gold loans - can be used to take gold loans as well to tide through tough times, making it more than just an investable asset

Reluctant to invest in physical gold?

Are you still apprehensive of walking up to a jeweller and buying physical gold? Purity and authenticity concerns, high making charges troubling you or worried about the safety of storing high value gold?
Worry not, there can be one of the investment avenue to reap the benefits of investing in gold without actually investing in physical gold.

Go the digital route

You can invest in mutual funds that are based on gold – either Gold ETFs or Gold funds. These are passively managed funds that invest in underlying physical gold of 99.99% purity. You can invest in these mutual funds by purchasing their units from the stock market or from the offering AMC directly.
You can be assured of getting investments in pure authentic gold, without any making charges and without any costs of holding or storage. Easily tradeable, these investments can also be quickly bought or sold making them highly liquid.

Do not let the fears and hassles of physical gold holding keep you away from this glistening investment opportunity.
Go digital and opt for Gold ETFs (if you have a demat) or Gold funds (if you do not have a demat) and aim to get all the features of traditional gold investments but in a modern way that suits the millennial investing style!

Also read - All you need to know about Gold ETF

Sources:
1. https://www.moneycontrol.com/news/business/personal-finance/how-our-millennials-are-investing-we-look-at-some-insights-7264431.html
2. https://www.bankbazaar.com/gold-rate/gold-rate-trend-in-india.html - average annual price for year 2000
3. https://www.goodreturns.in/gold-rates/ as on 30th June 2022
4. CAGR calculated for 22 ½ years from 2000 to 30th June 2022
5. Calendar year absolute returns for 2008 - Indices considered: Domestic Equity- S&P BSE 500 TRI, International Equity- S&P 1200 Global TRI (in INR terms), & Gold- Gold prices in INR terms
6. Average inflation calculated from 2000 from www.macrotrends.com data
7. https://www.livemint.com/money/personal-finance/investment-in-gold-can-be-more-than-a-hedge-against-inflation-11624909513364.html

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.