As a financial advisor, it is essential that you earn the confidence of your clients and one of the best ways to do so is by suggesting them genuine ways to build their wealth and earn good returns. One such excellent mode of investment is gold. Due to its ever-increasing prices and traditional use, it remains one of the most sought-after investment options.
Tradition and Popularity of Gold Investments
Every time there is a fall in the price of the reserve currency or even the capital market, gold prices appreciate significantly. It is for this very reason that it is usually referred to as a safe haven. Gold has been able to hold its value consistently, irrespective of the other economic conditions, thus, making it popular investment tool.
Traditionally Indian marriages involve a considerable amount of gold being gifted or purchased for the occasion. It is not restricted to marriages only; there are several festivals which see a surge in the gold purchase. Knowingly or unknowingly, it has been a part of our financial portfolio via traditions. Thus, you can suggest your clients go out for gold jewellery shopping without any second thoughts.
Historic returns of gold
You can recommend your clients to invest in gold from a long term perspective for a variety of reasons. One of the most prominent ones being its excellent returns. Gold prices have almost doubled since 2010, which is a little less than a decade. If any client had invested INR 5 lakhs in 2010, it would be close to INR 10 lakh as per current valuation. For a 15 year period, gold was known to offer similar returns as the Sensex. While the Sensex provided 13.97% as returns, gold was almost there with 13.66% returns.
The value of gold usually appreciates
A number of reasons work in conjunction to constantly appreciate the price of gold. India consumes about one fourth of the total gold in the world. Emerging economies around the world result in more wealth and thus higher demand for gold. Gold usually comes from the vault of the central banks. Constraints in the vault and a slower extraction rate mean higher demand for gold. From a 5 to 10 years perspective, gold value usually goes very high, if you consider the historic prices.
Safe Haven
If there is any sort of slowdown, everyone looks for gold as one of the first fall-back mechanisms for investment. When you consider inflation, gold acts as a great hedging tool. In the case of deflation as well, the purchasing power of gold increases thus, making it an all-weather investment tool. Even during any economic uncertainty due to geopolitical issues, gold is the most sought after investment option.
Gold Investments
As a sound financial advisor, you can recommend your clients to buy gold for the above reasons and more. Adding gold will enable them to build wealth over time and leave behind a legacy for their future generations as well. You can suggest different ways by which clients can invest in gold. They can either buy gold coins, gold bars, jewellery etc.
