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  • Guide to Invest in Gold I Diwali 2024

Guide to Invest in Gold I Diwali 2024

 Guide to Invest in Gold I Diwali 2024

 

Investing in gold during Diwali is a long-standing tradition in many Indian households. This period, often referred to as the festival of lights, is not just about celebrating with family and friends but also about making meaningful investments for the future. Gold is considered a symbol of wealth, prosperity, and good fortune, making it a popular choice during this auspicious time. Many people believe that buying gold during Diwali brings blessings and happiness to their homes.

Financial Benefits of Gold Investment

Investing in gold offers several financial benefits that make it an attractive option during Diwali. One of the main advantages is that gold tends to retain its value over time. Unlike cash or other assets, gold has historically been a haven during economic downturns. This means that if the economy faces challenges, the value of gold often remains stable or even increases.

Furthermore, gold can act as a hedge against inflation. As prices rise, the value of gold typically increases, ensuring that your investment keeps pace with the cost of living. Investing in gold during Diwali can also be seen as a way to build wealth for the future. Many people buy gold jewellery or coins, which can be appreciated over the years.

Finally, purchasing gold during this festive season allows individuals to take advantage of various offers and discounts provided by jewellers. This makes it a smart time to invest, as you can get quality products at competitive prices while celebrating the joy and spirit of Diwali.

Cultural and Traditional Significance

Diwali, known as the Festival of Lights, is one of the most important festivals in India. During this time, people celebrate wealth, prosperity, and good fortune. Gold has always been a significant part of these celebrations because it represents wealth and success.

Many families buy gold during Diwali to seek blessings for financial prosperity in the coming year. It’s a common practice to purchase gold items like jewellery or coins to welcome Goddess Lakshmi, the goddess of wealth, into their homes. People believe that buying gold during this festival brings good luck and prosperity.

Gifting gold to family and friends is also a cherished tradition during Diwali. It strengthens family bonds and creates wonderful memories. By investing in gold during this festival, individuals honour their cultural traditions and connect with practices that have been followed for many years.

Different Ways to Invest in Gold

Investing in gold can be done in various ways, and each option comes with its own benefits. Whether you're looking for a traditional or modern approach, here are the key ways to invest in gold

1. Physical Gold

Buying physical gold has been a long-standing tradition, especially during festivals like Diwali. You can invest in gold jewellery, gold coins, or gold bars. People value gold for its beauty and cultural importance. While owning physical gold can be satisfying, it comes with certain challenges. You need to ensure the gold’s safety by storing it in a locker or safe place. Moreover, if you're buying jewellery, there are making charges added, which don't add to the value of gold but increase the overall cost. The key concern is storage and safety issues. 

2. Gold Exchange-Traded Funds (ETFs)

Gold ETFs are a modern, hassle-free way of investing in gold. These funds allow you to invest in gold without physically owning it. Gold ETFs are traded on the stock exchange, much like stocks, and their value is linked to the market price of gold. This form of investment provides easy liquidity, meaning you can buy and sell gold ETFs whenever the stock exchange is open. This is best for the person who wants to avoid the risks and costs of storing physical gold.

3. Sovereign Gold Bonds (SGBs)

Sovereign Gold Bonds (SGBs) are issued by the Indian government and offer a safe and tax-efficient way to invest in gold. The bonds are linked to the market price of gold and come with the added benefit of an annual interest rate of around 2.5%. If you hold the bonds until maturity (typically 8 years), you also get tax exemption on the capital gains. This makes SGBs a very attractive option for long-term investors who want to benefit from both gold price appreciation and steady income. This is best for Long-term investors looking for a low-risk investment option.

4. Digital Gold

Digital gold is becoming increasingly popular, especially for small investors who want to start with a small amount of money. You can buy gold digitally through various platforms and other financial apps. The gold you buy is stored securely in a vault by the service provider, so you don’t have to worry about storage. You can buy as little as one rupee’s worth of gold, and you can sell it whenever you wish. The key benefit is Easy and low-cost entry into gold investment.

5. Gold Mutual Funds

Gold mutual funds invest in a range of gold-related assets, such as gold ETFs or stocks of gold mining companies. The advantage here is that you are not directly investing in physical gold but in businesses related to gold. This allows for a diversified investment in the gold sector. Professional fund managers handle the investments, so you don’t need deep knowledge of the market. Gold mutual funds provide some protection against the risks of holding only physical gold or ETFs. this is best for the Investors seeking diversification in their portfolio.

6. Gold Futures

Gold futures are contracts that allow you to buy or sell gold at a set price on a future date. This type of investment is more suitable for experienced investors who are familiar with commodity markets. Gold futures offer high potential returns because you are trading on the future price of gold, but this comes with high risks due to market fluctuations. It's a more speculative form of gold investment and is often used by traders looking for short-term gains. The benefit is a give high returns in the short term.

Each of these methods has its strengths, and the right choice depends on your investment goals, risk tolerance, and time horizon. Whether you want to go the traditional route with physical gold or opt for more modern investments like ETFs or digital gold, Diwali presents an ideal time to explore these opportunities.

Gold Price on Diwali Dhanteras

 

S.NO. 

Price 

Date 

1

₹60,746

Fri, 10th November 2023

2

₹50,625

Sat, 22nd October 2022

3

₹47,674

Tue, 02nd November 2021

4

₹51,043

Fri, 13th November 2020

5

₹38,273

Fri, 25th October 2019

6

₹29,635

Tue, 17th October 2017

7

₹29,932

Fri, 28th October 2016


 

Benefits of Gold as an Investment

Gold has always been considered a stable and valuable investment, and its benefits are especially highlighted during uncertain economic times. Here are some key advantages

1. Hedge Against Inflation

Gold has historically maintained its value over the long term, making it an excellent hedge against inflation. When the value of currency decreases, the price of gold usually rises, protecting purchasing power.

2. Portfolio Diversification

Adding gold to an investment portfolio helps diversify risk. Since gold often moves in the opposite direction of stocks and bonds, it can balance the impact of market volatility and reduce overall portfolio risk.

3. Liquidity

Gold is a highly liquid asset. Whether it is physical gold or gold ETFs, gold can be easily converted into cash when needed, ensuring that it remains an accessible investment.

4. Safe-Haven Asset

 In times of geopolitical or economic instability, investors tend to flock towards gold. Its value remains relatively stable when other markets are fluctuating, making it a reliable asset during crises.

5. Cultural Significance and Demand

In countries like India, gold is deeply embedded in cultural and religious practices, leading to high demand, especially during festivals like Diwali. This consistent demand supports gold prices, adding another layer of security to the investment.

Tips for First-Time Gold Investors

1. Start Small

As a first-time investor, it's important not to put all your savings into gold at once. Starting with a smaller investment lets you observe how gold behaves in the market. You can track its price changes, understand the timing of buying and selling, and make smarter decisions in the future. This cautious approach helps reduce the risk of sudden losses, allowing you to gain experience without overextending your finances.

2. Choose the Right Type of Gold

Physical gold, like jewellery or coins, has sentimental value and can be kept as a family heirloom. However, it requires secure storage, and you may have to pay extra for safekeeping. On the other hand, digital gold, such as Exchange-Traded Funds (ETFs) and Sovereign Gold Bonds (SGBs), offers the advantage of not worrying about storage or purity. With SGBs, you even earn interest, which adds an extra layer of income to your gold investment. Evaluate the pros and cons of each type before deciding based on your long-term goals.

3. Understand Market Trends

Gold prices are influenced by global factors such as inflation, geopolitical tensions, and economic uncertainties. Before investing, it's crucial to do some research or consult financial experts to determine if it's the right time to buy. Sometimes, it’s wise to hold off buying during peak price periods. Monitoring trends over a few months can give you insights into the best times to make your purchase and help maximise potential gains.

4. Consider Long-Term Investment

Gold is often seen as a 'safe-haven' during times of economic instability. However, its returns are generally gradual. When you invest in gold, keep in mind that its value increases over years rather than months. It’s not a quick-profit asset but rather a reliable store of wealth that can provide financial security, especially during inflation or downturns in other investments, like stocks.

5. Buy from Reputable Sources

Whether buying physical gold or investing in gold-backed digital options, always verify the authenticity of the platform or dealer. Check for certifications, like the Bureau of Indian Standards (BIS) hallmark for physical gold, and read reviews for online platforms offering digital gold. This ensures you're getting what you pay for, avoiding fraud or substandard quality, and guaranteeing the best value for your money.

Common Mistakes to Avoid When Investing in Gold

When investing in gold, it’s important to avoid some common mistakes to ensure you make the most of your investment. Here are a few mistakes to watch out for

1. Not Researching Before Buying

Many people buy gold impulsively without understanding market trends or the type of gold they are purchasing. It’s essential to do proper research, especially if you're buying physical gold or gold investment products.

2. Focusing Only on Jewellery

Buying gold jewellery is often popular, but it comes with added costs like making charges, which reduce the value of your investment. If you’re looking for gold purely as an investment, consider other forms like coins, bars, or gold ETFs.

3. Overlooking Hidden Costs

Storage, insurance, and making charges can add up when buying physical gold. If you invest in digital gold or ETFs, there may be management fees. Always check for these extra costs to understand the true value of your investment.

4. Ignoring Market Timing

While gold is often seen as a safe investment, its prices fluctuate. Investing when prices are high may lead to smaller returns. Keep an eye on the market and try to invest when gold prices are stable or lower.

5. Not Diversifying

Putting all your money into gold might not be the best strategy. While gold is a good hedge against market volatility, it’s important to diversify your investments across other asset classes like stocks or bonds to spread risk.

Final Thought

Investing in gold during Diwali has long been a cherished tradition, and with the variety of modern options available, it’s easier than ever to make gold a part of your financial portfolio. Whether you’re opting for physical gold or exploring digital alternatives, the key is to approach your investment thoughtfully. By understanding the different forms of gold investment, avoiding common mistakes, and aligning your choices with long-term goals, you can benefit from the stability and security that gold offers. This Diwali, let gold not only brighten your festivities but also strengthen your financial future.

People also ask

Q1. Is it good to purchase gold on Diwali?

Ans:- Yes, purchasing gold on Diwali is considered an auspicious tradition in India. Many believe it brings prosperity and good fortune for the coming year. Beyond the cultural significance, Diwali is also a good time to invest in gold from a financial perspective. The demand for gold increases during this festive season, and many jewellers and financial institutions offer attractive discounts or promotions, making it an ideal time to buy. Moreover, gold has always been a safe-haven asset, offering long-term stability and acting as a hedge against inflation, making it a solid investment choice during Diwali.

Q2. Does gold price fall during Diwali?

Ans:- Typically, gold prices do not fall during Diwali; in fact, they tend to rise due to high demand. Diwali is one of the busiest times for gold purchases, driven by both cultural practices and gifting traditions. With the increased demand, jewellers may not reduce prices, but buyers often benefit from special offers or festive promotions. However, gold prices are influenced by global factors such as inflation, interest rates, and geopolitical events, so it's important to monitor the market closely for the best buying opportunities.

Q3. Will gold prices increase in Diwali 2024?

Ans:- Gold prices are expected to remain stable or increase during Diwali 2024, primarily due to the usual rise in demand during the festive season. Global factors such as inflation rates, currency fluctuations, and geopolitical tensions will also play a role in influencing the price. While it is difficult to predict exact price movements, many experts believe that gold, being a safe-haven asset, will continue to perform well, especially in uncertain economic times. If you are considering investing in gold during Diwali 2024, keeping an eye on market trends and timing your purchase could help you make a more informed decision.

Q4. Will gold reach 1 lakh?

Ans:- While predicting exact gold prices is challenging, some market analysts believe that gold could reach ₹1 lakh per 10 grams in the long term, especially given the global economic uncertainty and inflationary pressures. Gold tends to rise in value during periods of financial instability, making it a strong candidate for reaching higher price points over time. However, this would also depend on factors like central bank policies, demand from investors, and geopolitical events. Although reaching ₹1 lakh may not happen immediately, gold's historical trend shows that it gradually appreciates over the years, making it a valuable long-term asset.

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