Stocks or Gold: Which One Should You Put Your Money Into?

Ever since the pandemic hit, the entire investment scene has turned upside down. Multiple corrections across various asset classes have given investors some seriously sleepless nights. And they’re now entangled in the eternal dilemma of whether they should be investing in stocks or gold. 

RODNAE Productions/Pexels | Investors are forever entangled in the dilemma of whether they should put money in stocks or gold

But, why did such a dilemma arise in the first place?

If we go statistically, there’s a significant rise in the stock markets as they’ve touched an all-time high of over 52,000 points. On the contrary, gold prices are falling with the rise in stock prices. They’ve come down to INR 46,000 per 10 grams from an all-time high of INR 57,000 per 10 grams. So, the tradeoff that seems to exist between both asset classes is – gold prices might rise when the stock prices suffer, and gold prices might fall while the stocks perform pretty well.

Now, before you take any impulsive decision, let’s first learn the pros and cons of investing in each of them.

Why you should and shouldn’t invest in Gold

The upside:

• Serves as the best hedge against inflation
• Provides tax benefits
• Who doesn’t love to own something that’s tangible and desired by all?!

The downside:  

• Pays no dividends
• Doesn’t bring economic growth
• Doesn’t generate cash flow

Why you should and shouldn’t invest in Stocks

The upside:

• Have higher liquidity
• Have higher returns in shorter periods of time
• Easy to buy and sell

The downside:

• There’s a risk of losing it all
• Neck-to-neck competition
• Quite an emotional rollercoaster!

Overall, considering the current volatility in the stock market, investors are resorting to buying gold for investment, which according to them is comfort food for the portfolio. Still, we’d like to present some valuable recommendations straight from financial experts so that you can play safe.

MayoFi/Pexels | Currently, considering the volatility in the stock market, investors are resorting to buying more gold, but is that really a wise decision?

Hear it out from the financial wizards!

• Keeping in mind that stock prices are on the higher side, former chairman of BSE and Managing Partner of Ravi Rajan & Co, S Ravi suggests that investors need to be sagacious to survive happily in this buoyant market. He recommends having a diversified portfolio as it enables investors to alleviate risks associated with each class of assets.
• The founder & CEO of IFA Global, Abhishek Goenka, however, finds gold to be a better bet. He says so because the global central banks are increasing gold in their Forex reserves, and even the RBI has intervened to prevent Rupee appreciation in order to bolster its Forex kitty. So, it’s likely that gold in INR terms can remain supported for a long time. Harshad Chetanwala, Co-Founder of MyWealthGrowth.com agrees with Goenka.
• Jitendra Solanki, another financial expert, chips in by saying that while gold may be a good hedge against inflation, equities deliver higher compounding effects and higher returns in the long term. Therefore, it’s advisable that you make equity as a core asset class in your wealth and accumulation.