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10 Reasons to Invest in Gold for Portfolio Diversification

April 21, 2023

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    Table of Contents

      Gold is a great investment asset with low risk to add to your portfolio. There are multiple reasons why people favour this yellow metal. Lets's explore a few of them.

      Indian youth today are tech savvy and investment oriented. They still use traditional investment methods for financial planning, but more and more people are turning to long-term profit investment planning. This is where investing in gold for portfolio diversification comes into play

      Hence, they choose Gold as an investment

      Gold remains an important asset for investors today as it was 5,000 years ago. All due to its inherent beauty and industrial value. Investors always consider it a safe bet and hassle free investment, 

      If you’re planning to diversity your portfolio, here are 10 reasons which can help make up your mind about why Gold is a good investment option:

      1. Gold is money 

      This is something we all know, right? Even if Gold is not used as a currency today, its role and high liquidity make it superior to any other currency. In fact, Gold has been a currency longer than any other currency in history. 

      Money acts as a long-term store of value. Gold delivers on this promise better than any fiat currency. Physical Gold has been the best long-term store of value since the 1900s. 

      There was a time when currency was valued higher than Gold in the short term, but in the long run, the rich have always held onto Gold. The price of Gold fluctuates, but its value is eternal. 

      Think of how Gold has maintained its purchasing power against the currency over the last few years. All fiat currencies naturally lose value over time and continue to seep into purchasing power. But Gold never disappoints.

      2. Gold is highly liquid 

      This is a big reason to invest in it. Gold can be easily bought and sold whenever you want. It is a tangible asset and has the highest long-term value compared to other currencies and assets in the world. You can also easily get a loan against Gold. 

      This has become even more convenient now, since the world got introduced to Digital Gold. This option has made the Gold buying and selling process easier and seamless. A few clicks anytime and anywhere are enough! It is also 100% safe. 

      When you purchase digital Gold online, physical Gold is allocated and stored in an insured and certified safe vault in your name. You can receive physical delivery of it at any time. This eliminates the risk of theft or inventory issues without worrying about quality. 

      3. Gold acts as a hedge against inflation


      As we mentioned before, Gold's track record dates back more than 5,000 years. It has been highly profitable over the long term. 

      Inflation devalues ​​the currency, but Gold is doing well. The price of Gold has doubled in the last 5 years and quadrupled in the last 10 years. Gold has proven time and time again that it can provide strong protection against inflation. 

      Gold prices are largely immune to inflation, so you don't have to suffer losses when inflation sets in or even when global market exchange rates fall. You will always have something to rely on in such times.

      Here is how to be inflation proof with Jar app.

      4. Gold helps in wealth creation 

      Gold is a precious metal and we all know it. It occupies a special place in every Indian household and is considered a family heirloom. 

      Investing in Gold has the dual benefits of reducing risk and creating wealth. Even without an economic crisis or geopolitical tension, precious metals can generate decent returns over the long term.

      In the event of an economic or political shock, Gold as an investment provides a perfect investment hedge against equity capital losses. 

      Additional Read: Gold is more than just a Shining Yellow bar! Here’s how Gold affects the Economy at Large

      5. Gold helps to diversify your portfolio 

      Gold is considered a safe bet when the market is volatile. Gold is considered to be a highly effective portfolio diversifier due to its low or negative correlation with all other major asset classes. 

      Gold protects portfolios from volatility as both the macroeconomic and microeconomic factors that affect returns for most asset classes do not significantly affect the price of Gold. 

      In other words, when the value of stocks falls, the value of Gold rises. For a given level of return from a portfolio, adding Gold can reduce risk or volatility.

      Check out: Portfolio Diversification is what you need. Know how to diversify your portfolio.

      6. Gold is a good investment during a political crisis 

      We have often seen that as trust in the government dwindles, people flock to Gold as a safe investment option. In times like these, Gold offers stability and better return prospects than other investment assets such as stocks and bonds. 

      As tensions rise, stock markets falter and Gold prices move in the opposite direction to other financial assets. Investing in Gold is therefore profitable for investors. 

      7. You can invest or buy Gold from just ₹10 from your phone

      Buying Gold is relatively easy, especially since we have got the option of Digital Gold. Small amounts of money can be invested in Gold over a long period of time with high returns. This allows you to make lean investment decisions and invest the way you want. 

      It is an easy-to-purchase and accessible asset that anyone can feel comfortable investing in for the first time. Gold is bought and sold more frequently than many other major financial assets. With the wide range of Gold products available, it may be the easiest investment you have ever considered. 

      With Jar, you can start investing in Digital Gold from just ₹10 - anywhere and anytime. It can be bought, stored, sold, and even gifted - all digitally. 

      8. Gold has mortgage value 

      You can easily get loans from any lending institution using physical Gold as a mortgage. A loan to Gold is a secured loan. As a result, the interest rates are lower than those of personal loans. 

      After successfully repaying the loan, the bank or other lending institution returns the pledged Gold to the borrower. Yellow metal does not degrade over time, so borrowers do not have to worry about its value depreciating. 

      9. Gold does not require special knowledge  

      Can you spot a real diamond? Can you choose stocks or invest in other financial stocks based solely on your knowledge? Investing in Gold does not require this. No special skills, training or devices are required to buy or recognize Gold. 

      Unlike stocks, bonds, cryptocurrencies, real estate and many other investments, Gold does not require special skills. As an investor, all you have to do is buy Gold and store it. No boring charts to compare all day and trading bots to trust your investments. 

      10. Gold investments cannot go bankrupt

      You don't have to complete a paper contract to keep your Gold. No intermediaries or other parties are required to fulfill the contractual obligations. That’s because Gold is the only financial asset that is not a liability to another company. 

      This is important because if a bubble bursts or a crisis strikes, Gold will be the last survivor. 

      This is a powerful tool to have in your portfolio if your country or economy is in trouble. It also means that Gold never goes to zero. Gold is always valuable. If you need money, you can always sell it. 

      Read more: 16 Surprising Stats About Gold after the pandemic

      Owning Gold is more than just keeping bars in your personal vault. Even if you don't own Gold, you can easily invest in Gold online through apps and websites like Jar

      Investing in Gold is easy, fun, and lucrative. Gold retains its value, which makes it an excellent and solid long-term investment. Adding Gold to your portfolio could be a very smart move. 

      Because Gold is relatively scarce, its value often fluctuates independently of other assets such as stocks and real estate. Gold acts as portfolio insurance and the majority of investors believe that perhaps 5% to 15% of the portfolio should be invested in Gold or related investments. 

      Download the Jar app and add Gold to your portfolio now.