Akshaya Tritiya is regarded as one of the most auspicious days in the Hindu calendar. “Akshaya” implies imperishable and eternal prosperity which never diminishes. It is also known as Akha Teej. People treat this as a day that brings about prosperity and luck. Since gold symbolizes wealth and prosperity, people purchase gold on this day. This year, it will be celebrated on May 2, 2014.
Now, the big question. Should you follow the tradition and go about buying gold on this wonderful day or should you just ignore all this and regard it as just a superstition? It’s an interesting debate. Before answering this, let us see how gold has performed in the past.
The last 10 years data suggests that gold prices have appreciated from 5800 in 2004 to 28600 in 2014. This translates to total or absolute return of around 400%.
(Also see: E-gold – New way to invest in gold)
What this does say is that if you do not care about the markets, investing in gold will actually fetch you great returns in the long run. Here are 5 reasons why you should invest in gold on this Akshaya Tritiya:
- Akshaya Tritiya is traditionally believed to be an auspicious day and buying gold this day helps in growing wealth.
- This tradition was introduced long back so that such investments would help us save for the rainy day. Hence, this investment can actually act like an emergency fund for you.
- Investment in gold has produced 20% CAGR for the past 20 years. However, it may not be a great idea speculating in gold with the belief that gold prices will only move upwards.
- Do not avoid gold on this auspicious day just because financial planners or advisors warn you against it. Every advisor suggests at least 10-15% allocation to gold. This might be a good day to reach there.
- In the long term, investment in gold not only helps in preserving wealth but grows it as well.
Stating reasons you should invest in gold doesn’t mean you should neglect other financial products. Every portfolio should be well balanced with various asset classes. Speculation in gold can diminish the overall returns and land you in trouble.
(Also see: Investing in gold and gold ETFs)
For the set if investors who want to invest in gold this Akshaya Tritiya, here are various investment options available:
- Gold Jewellery
- Gold bar / coins
- E-gold (National Spot Exchange Limited)
- Exchange traded fund (Gold ETF)
- Gold funds
We recommend you to invest in gold ETF / E-gold / gold funds instead of buying physical delivery of gold jewellery from showroom or gold coins from banks.
Reasons:
- Purchasing physical gold from showrooms involve higher charges such as VAT whereas buying e-gold involves lesser charges.
- In case you consider storing physical gold in a bank, you might be charges Rs. 1000 – 2000 in the form of locker charges. Moreover, few banks might force you to buy insurance policies when you approach them for lockers.
- There is always the question of purity when it comes to purchasing physical gold. When you buy gold in paper format, you need to worry about this.
- Liquidity is never a concern with e-gold.
- Gold ETFs can be bought regularly to eliminate the risk of timing the markets and average the cost. SIPs are also available for some gold funds.
Conclusion
Gold is as volatile as stocks and mutual funds. There is no guarantee that it will keep rising. There might be global or domestic issues that could dent the performance of gold. However, if you invest in it regularly and for long, it should remain a safe haven in your portfolio.
InvestmentYogi wishes all its subscribers wealth, prosperity and happiness on this auspicious day of Akshaya Trithiya. Wishing you all Happy Akshaya Trithiya.
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