By – Mr. Jayant Manglik, President of Retail Distribution at Religare Securities Limited
Buying gold on this day every year, is akin to a systematic investment plan in gold.
While Akshaya Tritiya has become synonymous with buying gold, it is actually a holy day for a large part of our population. The word Akshaya means ‘that which never diminishes’. It is believed that whatever is started on this day will prosper. This is why it is a good day to start a new business, or join a new job just as the new CEO of MCX is expected to! Because of the belief that anything started on this day will grow, it is also an opportune time to make important purchases like gold, which is a symbol of wealth and prosperity.
In practice, buying gold every Akshaya Tritiya should be looked upon as a systematic investment plan since the festival occurs once a year. Data shows that, for India, gold is a must-have investment because one of the major factors driving price is the continuous depreciation of the rupee against the US dollar. Till there is an interest rate differential between India and the US, this trend will continue. While the price of gold depends on a variety of international factors like the strength of the US dollar, inflation and global interest rates, the continuous depreciation of the rupee against US dollar is the defining price parameter.
The last year and the last quarter too have seen a spurt in gold prices, much more than other investment alternatives. But mainly due to diversification , it is a must in every portfolio. Over the last 15 years, annualized returns in gold have been equal to that of the Sensex but with lower volatility.
Gold can be bought from a jeweler if it is for ornamental use. For investors, the options are many – it can be bought in multiples of 1 gm in the form of gold ETFs from equity stock exchanges, as bars of 10 gm, 100 gm and 1 Kg from commodity exchanges and also by investing via gold mutual funds. All of these avenues provide different benefits but are equally safe and all of them track the price of gold.
From an investor’s perspective, three things are important: diversification by adding gold to the portfolio, buying regularly via a systematic investment plan and making the first gold investment this Akshaya Tritiya!
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