10 Things to Keep in Mind Before You Plan to Buy Gold this Diwali
Obsessed with gold, many Indians consider gold buying in Diwali brings health, wealth, and happiness! Diwali is the festival of sweets, gifts, lights, and the glitter of gold.
An estimated 20% of annual gold sales happen during this festive season. Indians – men and women alike – are attracted to this precious yellow metal. While some gift gold coins to their loved ones, some display jewelry to flaunt their pride and financial status, and others use it as a lucrative investment option.
Gold for many years now has been a good investment option alongside investments in stocks and real estate as it offers protection against inflation, and economic uncertainty. Modern day options for investing in gold include Gold ETFs, Sovereign Gold bonds and Gold monetization schemes apart from jewelry and gold coins.
As in the case of any investments, for gold too, timing of your investment plays an important role in the value, returns you reap from such investments. You want to make a timely investment so that you derive great value, which in case of gold includes emotional and monetary benefits.
Many Indians consider Gold buying in Diwali, the right time, as the marriage season follows immediately after the festival, and the festival itself is an occasion for offering prayers to goddess of wealth and happiness Lakshmi and Lord Kubera seeking their blessings to make their gold investments grow in value.
People keep a close watch on the gold prices during Diwali, so they can grab the deals at the right price and place. Price and place are the two most important factors that help you make the purchase decision of this precious metal. Here is a checklist of factors that help you bring home this festive season the gold that truly glitters for you!
10 Things to Keep in Mind While Buying Gold this Diwali
Purity of Gold:
Purity of gold expressed in Carats is the primary factor to consider when buying gold. Carats expressed in numbers such as 24ks, 22k and 18k shows the strength and purity of gold, as gold, soft metal, is mixed with other metals such as silver, copper etc., so it becomes strong enough to be made into jewelry. A higher carat gold denotes purity of the gold, thus 24 Carat gold with 99.9% purity has a higher value than 22 carat, which is only 91.6% pure.
Symbol of Quality Standard:
22 Carat gold with high purity level is good for making jewelry and has a good resale value, as well! When investing money on this precious metal, you need to make sure that the gold conforms to the said purity level, and has the identification of such quality standards on it. The government made it mandatory to emboss 22 Carat gold with a Bureau of Indian Standards mark (BIS Hallmark).
Ascertaining the weight of every piece of jewelry or gold coin is important when buying gold. Typically, the weight of gold is expressed in grams, use electronic scales and weighing machines to make sure that you are getting every gram of gold for the money you invest.
Price is another important factor you need to consider, make sure you check the price of gold on the day of shopping. Generally, the price varies on the purity of the gold, for pure gold you need to shell out more money. When buying jewelry, you will have to pay for the labour charges involved in making the ornaments. Also, you should check for the wastage charges when buying jewelry. You need to bargain for the best price.
Mixing gold with other metals to give strength for malleability also gives it different colours. This precious metal comes in a variety of colours apart from the glittering yellow gold; you can also choose rose gold or white gold. It is also available in a mix of two-tone colors.
Storage of the gold is an important consideration while buying gold. You need to make sure you have a safe and secure place to store the gold coins, jewellery. Bank safes may be your best bet for storing gold.
Gold will always have a market, as many small and large financial institutes and banks trade in gold. As such, gold will retain its value in the long-run, but you need to consider short term market volatility before buying gold, as short term market reactions can affect your investments in gold.
The purpose of buying gold influences your decision to buy gold in Diwali. If you plan to buy gold to use them as ornaments, jewellery is an option, but if you plan to use gold purchases as investment, you have many instruments available in the market today. You can buy gold coins, bars, Gold Exchange Traded Funds (ETF), backed by physical gold, similar to regular mutual funds. Sovereign gold Bonds, recent instrument of gold investments from RBI offer regular returns in the form of interest in addition to capital gains in the form of appreciation in the value. Gold monetization scheme helps you invest regularly in installments and diversify your spending over a period.
Assets with higher liquidity have great demand. Gold in general has higher liquidity, but instruments such as coins may not be liquid on the other hand emerging instruments such as Gold ETFs are popular for their liquidity as you can buy or sell them on stock markets.
While buying gold in Diwali make sure, you buy it from a trusted seller, who offers you pure gold with the correct weight and gives you a bill for the purchase. With a bill for your purchase, you can use indexation benefits against tax burden of capital gains. Only a trusted seller hands you the bill for your gold purchase.
With Diwali around the corner many stores offering discounts, it is the right time to invest in gold to flaunt your financial status. If you are looking to buy gold for investment purposes, various financial institutions and government help you invest in sovereign gold bonds and Gold ETFs that offer capital gains along with the lure of regular returns in addition to capital gains.
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