Introduction

If you are in your 20s or 30s, your investment portfolio will most likely be dominated by equity or equity funds. While this is the best option in your prime earning and risk-taking years, it is important to diversify your portfolio.

So, what are the other investment options for millennials?

Gold is an auspicious metal that can also be a prudent investment. It has always been an essential component of a healthy, well-balanced portfolio. In India, particularly, investors have depended on gold for positive investment returns.

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The metal is also a symbol of wealth. Your ancestors used it as an all-purpose investing strategy to help overcome any financial misfortune. For millennials, gold has long been the first form of investment. It offers multiple options, handsome returns, and shock-proof ROI. As a result, its stability continues to attract millennials.

Reasons to invest in gold

There are many upsides to gold investing. It has the potential to hedge against unfavourable market conditions, generate returns exceeding inflation rates, and more.

• High liquidity

The demand for gold is high in the market, making its buying and selling easier.

• Stability

Gold is soft and durable. It is relatively less volatile than other high-risk asset classes.

• Monetisation through gold loans

You can use gold during a crisis, whether it is financial, political, or health-related. You can use it to attain gold loans, making it better than an investable asset.

How are millennials investing in gold?

Gone are the days when investing in physical gold was the only option. Today, millennials have many other investment methods, with a growing trend of investing in Exchange-traded funds (ETFs), Digital Gold, and SGB.

1. Gold ETFs

Gold ETFs are based on gold prices. ETFs track the performance of a specific index, while gold ETFs track gold prices. The asset management charges for gold ETFs are extra, but they are still cheaper than investing in physical gold.

Gold ETFs are traded conveniently on stock exchanges and eliminate the troubles of physical storage and making charges. You are liable to pay taxes on long-term gains from ETFs.

2. Digital gold

The option to invest in digital gold carries the benefit of purchasing in small quantities. The payment methods available are Equated Monthly Installments (EMIs) and Unified Payments Interface (UPI) platforms.

Additionally, make it a habit to invest in digital gold. You can eventually convert it into elegant jewellery, making it an emotional asset that is an investment and a practical financial instrument. Digital gold can also be used to take a gold loan in times of financial crisis.

3. Gold mutual funds

Recently, mutual funds have gained immense popularity. They are viewed as one of the safest investment vehicles. When you invest in gold mutual funds, your money is directly or indirectly allocated to gold reserves. Generally, these investments are in stocks of mining companies, physical gold, and gold-producing and distributing syndicates.

Gold mutual funds are ideal investments for investors with a longer investment horizon. They are managed professionally and offer more liquidity and diversification.

4. Sovereign Gold Bonds (SGBs)

The government issues Sovereign Gold Bonds (SGBs). They are alternatives to physical gold. You have to pay the issue price in cash; on maturity, you will receive the yields in cash. SGBs have a tenor of 8 years, but you can redeem them earlier after the fifth year of the issuance date.

So, SGBs can be suitable if you’re seeking long-term capital growth. They are tax-friendly and excellent for low-risk investors seeking regular income.

5. Gold ornaments

If you are traditionally inclined, you can buy gold ornaments as an investment and adornment. But, before making the purchase, remember to consider the resale value, making charges, and storage charges.

Bottom line

Gold is attractive for millennials as one of the safest investment options. While its form has changed over the years, its value remains as strong as ever. Investing in gold has become hassle-free for millennials with the updated investment methods. However, you must note that you cannot convert investments in mutual funds, ETFs, and futures contracts into physical gold.

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