Gold is brought by many Indian families, as much for tradition as for investment. But just because you can wear gold doesn’t make it an investment.
According to CA Nitin Kaushik The purchase of gold jewellery is often perceived as an investment as it is a store of value based on sentiment. But, the jewellery you are buying is subject to making charges and wastage which devalue it immediately.
So, if you buy jewellery for ₹1 lakh, you could end up paying ₹12,000 over and above the cost in the form of making charges and wastage. That money never returns at resale.
Furthermore, style changes, and it is difficult to sell jewellery. Even when you sell it, jewellers typically charge a service fee, ultimately reducing your financial payout.
Gold ETFs on the other hand, are different. Using the same ₹1 lakh; when the gold ETF is purchased, no service fees are subtracted and that entire amount is converted to an investment value.
Gold ETFs also provide instant liquidity. You can sell without visiting a seller or negotiating with prospective buyers. The sale can happen any time the market is open.
The returns of gold ETFs correlate directly to the market price and are simply a transparent asset. Gold ETFs are also tax-friendly after holding over a three-year period as you get tax relief with indexation.
Again, the one main difference is the intended purpose. Jewellery is a traditional and emotional purchase while gold ETFs is a financial asset to create wealth.
So many people confuse the emotional purchase as good investing. The emotional purchase is traditionally significant while the financial asset is to create financial security in the future.
Before you purchase gold jewellery next time; think about if you need the jewellery as part of tradition or if you need an investment. One is meant to enhance items worn on your wrists and the other is meant to enhance your wealth.
Experts will often talk about long-term value, and not short-term beauty. Gold jewellery can create memories, but gold ETFs do not represent personal accountability. Gold ETFs work much better for investors seeking pure investment results.
Jewellery shopping is regularly an emotional act, but investment requires cold financial logic. Distinguishing between tradition and finance is crucial when deciding how to handle money.
In conclusion, pick gold jewellery for the special occasions or family pass downs. Choose gold ETFs when targeting growth, liquidity and tax-efficient wealth creation.
Also Read: Fixed Deposit vs Recurring Deposit: Which One is Better For You?
This simple method helps ensure your gold decisions offer value beyond emotional sparkle, by using money to work for your future, rather than just adorning it.
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