Why Are Indians Investing Relatively Less In Gold And Property Now?
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Why Are Indians Investing Relatively Less In Gold And Property Now?

Why Are Indians Investing Relatively Less In Gold And Property Now?

Rakesh had heard from his parents that investments in gold and property could never go wrong or lead to losses. However, over the last few months, the prices of gold and real estate had both crashed quite a bit. While it is true that even though nobody had lost money, f they were to sell the gold they had hoarded so very carefully over the last many years, his parents were bound to not earn too much money from it.

Owing to these fluctuations in prices, Rakesh had decided to look for safer investment instruments wherein prices and other economic factors including government regulations did not affect the prices too much.

Similar to Rakesh, many Indians have moved away from investing in gold and real estate. While gold has always been considered a safe investment by their families, young Indians today are looking for safer ways to invest their money. In such a scenario, ULIPs emerge as a saviour which allow investors with the flexibility to switch between equity funds, debt funds or even maintain a mixed portfolio of both kinds of funds. Since equity funds offer higher returns but also pose higher returns, and debt funds offer lower returns and lower risks, ULIPs act as the perfect balancing act to maintain a portfolio of investments which can cater to both. People often find themselves in a quandary over whether to invest in ULIP or mutual funds, but the tax benefits on ULIPs make them a significantly better investment instrument than mutual funds.

Gold has long been a cherished asset for Indians as an investment instrument, owing to its ability to hedge against inflation.

However, investing in gold also has significant cons, including the reasons below:

1.There is no yield:

Investing in equity or debt funds causes the assets to grow, and the amount of the investment will grow over time in relation to market forces. This is not the same for gold. Though the value of gold held may increase, the actual quantity of gold held will remain the same. With investments in instruments like term deposits, one can earn interest; investing in shares leads to dividends which act as a regular source of income; but investing in gold does not have such regular benefits which act as a supplementary source of income. Thus, Indians are moving towards ULIPs such as the Bima Advantage Plus Plan, which offers investors a combination of investment as well as insurance coverage. Additionally, the benefits of ULIP plans ensure that the policyholder can also withdraw funds partially without incurring any charges.

2.Gold also has low capital gains:

as compared to other instruments of investments. Additionally, investing in gold has implications in matters of tax, whereas the tax benefits on ULIPs are enormous and result in significant savings for the policyholder.

3.Annoying to transact and difficult to store:

While gold had been popular owing to its easy liquidity, Indians these days are less keen to hoard gold in lockers and pay for the extra space. Benefits of ULIP plans shine through here as well, since these are virtual transactions which involve quick returns. Bima Advantage Plus Plan allows policyholders to make the most of market opportunities, by switching easily between funds.

Real estate, which had also been a popular instrument of investment, until a few years ago has declined in popularity over the last couple of years. The biggest disadvantage of investing in real estate is that it is not a liquid asset, which makes it all the more difficult to sell or even rent. It is also a time-consuming process to look for tenants and purchasing a new property might require enormous collateral. Thus, as an investment instrument, real estate is a long-term plan which cannot be used for achieving short-term goals.

Benefits of ULIP plans are creating waves in investment circles, owing to its ability to meet short-term goals as well while also helping create wealth. Tax benefits on ULIPs are significantly higher than those offered by investing in gold or real estate. When trying to decide between ULIPs or mutual funds, ULIPs emerge as a better choice owing to the security they offer in terms of the flexibility available to policyholders for switching between different kinds of funds.

The Bima Advantage Plus Plan offers six different funds to choose from depending on the individual policyholder’s risk appetite, and acts as a healthy combination of insurance and investment.

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