Happy Gudi Padwa! We hope this new financial year helps you achieve your wealth goals.
Gudi Padwa is celebrated on the first day of the month of Chaitra in the Hindu calendar. It is the New Year for people in Maharashtra and Konkan; and the harvest festival in Andhra, Tamilnadu, Kerala, Assam, Kolkata, and others. This festival symbolizes the onset of the spring season too.
We are sure, like most Indians, you prefer buying Gold or investing in Real estate on this festive day. But have you thought of investing in equities instead? In the last ten years, gold has had a CAGR of 5.7%, while the Nifty has delivered a return of 15.5%.
Despite such performances, many shy away from investing in equities. They invest in traditional assets like FDs, RDs, or even savings schemes local jewelers may offer. But such schemes and funds are unregulated, opaque, with unreliable records.
That’s why investing in the SEBI-regulated stock market makes sense. Still not sure?
We have five reasons why investing in equities is better than investing in gold.
Long-Term Returns
Indians are the highest consumers of gold in the world. However, it holds no potential unless you plan to buy and sell it for profit. Moreover, gold requires a large investment. On the other hand, investing in fundamentally strong equities offer good returns in the long term. You can start investing with as less as Rs. 500. Once you’ve invested your surplus, holding your portfolio for at least 6-7 years will help you get the benefits of compounding. A low capital investment makes equities accessible and attractive to the masses.
Liquidity
Gold is not as liquid as equity investments. Selling it can often be time-consuming. You visit a jeweler willing to buy gold. The jeweler may weigh the ornaments, etc., deduct making charges, etc., before offering money in exchange. The amount you receive is dependent on the jeweler and the deductions proposed, which means you may or may not profit.
But equity investments are highly liquid. You can buy and sell shares at the click of a button. What’s more, the stock market is regulated. So, you know if you will profit before you sell. Unlike gold, selling your stocks is easy and uncomplicated.
Wealth creation
Gold has always been an asset that can help you tide over difficulties in life. It is a fixed asset whose value is not volatile enough for significant earnings. Though the value of gold fluctuates every day, you do not stand to benefit from it daily. Your equity investment portfolio value changes too, but the scope for earnings is higher the longer you stay invested. Remember, understanding the market, research, and investment planning are essential to creating wealth.
Efficiency
Gold is a tangible asset that you can dispose of when needed. But keeping it at home is risky and unsafe. However, your investments are held in a Demat account. Buying and selling stocks is as easy as buying gold from a jeweler.
Tax Benefits
Gold purchases do not offer any tax benefits. However, some investments like equity can help you increase your wealth faster over a long time due to the compounding effect, capital appreciation, and dividend income.
Buying stock or investing in a company means profiting when the company grows. As an investor, you get a share in everything a company earns. The company’s prosperity adds to your financial growth. However, equity investments are market-linked, so there will be lows too. When you choose to invest you must study the business, its prospects, and the market situation before you decide.
This Gudi Padwa, make the right choice. Choose to invest in equity too, and not just gold.
Read more: How Long-term investing helps create life-changing wealth – TOI.
I’m Archana R. Chettiar, an experienced content creator with
an affinity for writing on personal finance and other financial content. I
love to write on equity investing, retirement, managing money, and more.