Why Investment in Gold Is NOT A Great Investment?

It is not easy to chase someone’s mind when it comes to start making investment in gold. Don’t you agree? Therefore, many people take a big risk and end up falling badly. It’s not that they are new to the market or they don’t have knowledge. It is because of their decision that is changing overnight.

As a sharp fall in the market, the prices of Gold were in discussion a lot. People were ready to make a good investment in gold. What do you think? Does this make gold worth the investment? I do have reviewed many investors who said yes and were ready to keep 5-10% of the investment portfolio in gold preferably in liquid form.

In my opinion, this may not be a very good idea because when it comes to investment, it is more about psychology that determines the good return, not the assets.

Long Term Investment in Gold

Gold can be a better choice if you want to get more returns as compared to your investment in fixed deposits. The returns that you will get from investing in gold could beat inflation. If someone, who is ready to wait for at least 10-15 years then probably investment in gold would be a better choice.

Visualizing the past trends, gold has always underperformed equity benchmark indices over a long-term period i.e. for 15-20 years.

I don’t know how many of you have noticed but gold mainly performs during the crisis and doesn’t give a good response on normal days. Investment in gold will make the investors impatient with no returns even in a long duration. As nobody knows about the next crisis.

Investment in gold can make the investors and hence waiting for the years with no positive returns can psychologically affect the investors or force them to sell on gold investments with no gain and no loss.

Investment in Gold is for everyone?

The perfect investor to the gold is risk-averse, who doesn’t depend on gold for daily expenses. Trust me 8-10% returns in a long run with no capital makes them happy. Well! I know that is quite impressive, if you are one of them then go ahead.

In my opinion, the right investor to the gold is my mother and grandmother who safely invest by keeping their jewelry and gold coins in their locker.

So, how many of you are here to comment that keeping gold in physical form is not a good idea! Well, don’t try to impress me with the advantages of buying paper gold like mutual funds, ETFs, bonds, etc.  Thus, you will fail to accept the most important disadvantage i.e. high liquidity (instant buying and selling) in liquid form makes the investors impatient.

Unless one should have self-control and patience, investment in gold in liquid form should be avoided.

Right Way To Invest In Gold

It is tough to deal with human psychology that changes overnight when it comes to investment. Isn’t it? Long term investors with their patient mind should continue to invest in gold, the way your mother and grandmother is investing. I am talking about the physical form that comes with security.

People who are already retired or will soon be retiring should be the right investor in liquid form. I can’t promise great returns but it works as a shield against bad times. They need to increase the share of their portfolio in gold as they grow older.

We have already discussed a lot about investment in gold. I hope your overnight changing decision will not affect your investment. As an investment, gold has none of the virtues.

Now, what is your decision for investing in gold? Well! The right way to invest in gold can vary from person to person. So make your decisions wisely.