Investors turn to Gold for better returns

Bangalore: In global slowdown, gold has become a preferred investment option for investors. According to investment experts, gold should always be part of the portfolio of a person who wants to preserve his wealth.

A wealth manager with a bank says, "Diversification is an important tool to preserve one's wealth over a long period. When we talk to our clients we tell them fixed deposits, corporate deposits, stocks, gold, all should be part of their portfolio."

In the last few months when it got very difficult to get handsome returns from all the other investment, gold fetched handsome returns. However, the new crop of investors has left financial advisors a worried lot. They say most new investors have unrealistic expectations from gold.

Kartik Jhaveri, Director, Transcend Consulting Director says, "Investors should not focus on such sporadic returns. It is mainly because of volatility. For example, the dollar's weakness, crude prices going up, uncertainties in the global economy would have a positive impact on gold prices. He says, "Over a long period gold would give around 6-8percent returns. If you look at the returns in 10 years, it would just about beat inflation."

Investors are also not fully aware that which the ideal form of investment in gold is? Many investors apparently would still prefer buying gold coins and bars sold by reputed banks (if not jewellery) and safe-keep them in their bank locker.

Jhaveri says, "It is better for investors to go for exchange-traded gold funds, especially if they are looking for a hassle-free investment option. These are mutual fund schemes investing in gold that anyone can buy and sell in a stock exchange. Though it may look the most convenient form of owning gold, the idea is yet to catch up with common investors."

If you are a bit more adventurous, then you may consider directly owning stocks of some gold mining companies. Sure, they carry more risk, but they can also reward you, says Jhaveri.