Gold investments are for those investors who want to be invested for a long term purpose and want to hedge risk against the inflation. An investment in gold can be a many type such as physical gold, gold future contracts. It is consider the safest investment asset by the investor. Equity investment gives the capital appreciation to the investors while they diversify their portfolio into the good stocks. It is helpful for the capital appreciation if they sold their share on the right time and at the right moment of market.
- Duration of staying invested:
Gold Investment: – Gold is invested for short term and long term purposes according to the investors risk taking appetite. Moreover you quickly transit gold into EFTs, the funds which are traded over stock exchanges.
Equity investment: – Equity investors are also for long and short term purpose but the difference is its highly volatile and can turn the table anytime. An investor can buy and sell stock anytime and at any amount.
- Size and scale of capital requirement:
Gold investment: – There is no limit on size of purchase it starts from grams to Kg. According to the requirement of investors they can purchase or invest in it as per their want or requirement.
Equity Investment: – There is also no limit for investing in equity. An investor can purchase a single share or in lot also according to the investment power of the investor.
Gold investment: – An investor should invest in gold with the prospect of liquidity will be medium to low. An investor should invest in gold if he/she doesn’t want money immediately or wants to invest for a long time.
Equity Investment: – An investor should invest in equity with the prospect of liquidity will be high. An investor should invest in equity as he/she can take out its investment either within an hour, day, month or year as per they want return on investment.
- Regular Income:
Gold Investment: – Gold investment is unable to generate regular income for investors. As it can be invested for a longer view plan or get huge capital appreciation.
Equity Investment: – Equity investment can generate regular income if stock and funds are dividend paying. If an investor knows where to invest and when to invest then equity can be a best source for regular income generation for investors.
Gold Investment: – Gold Investment carries medium risk as you can hold your investment for a longer period and it’s less volatile than equity. As it doesn’t change its value as fast as equity can.
Equity Investment: – Equity investment carries high risk as you can buy and sell shares or funds anytime and it totally depends on day to day market performance. It’s highly volatile in nature as it changes its price drastically on a daily basis.
- Tax advantage:
Gold investment: – Gold investment carries no tax advantage at all for the investor. As it is invested for medium to long term advantage.
Equity investment: – There are no tax benefits for long term capital gain in equity.
Gold investment: – There is no chance for diversification in gold as they have to buy according to the quantity.
Equity investment: – Investors can diversify their investment through mutual fund schemes.
Gold Investment: – At the time of inflation gold investment helps to hedge that risk on investment for your portfolio.
Equity Investment: – Equity investment can be good for higher return for a long term at the time of inflation.
Conclusion: – These are the key differences between gold and equity investment which investors should always remember before investing in both of these investment tools. As it gives the exposure to the investor in which investment tool they want to invest according to their investment plans and also investor can take advice from SEBI registered stock advisory company.