Dollar Didi is Kool Kanya’s financial advice column.
Q. Dear Dollar Didi, I just got my first salary, and my mom said I must buy a piece of gold jewellery as an investment. Is investing in gold jewellery, the right thing to do?
I have never understood why my mom bought all that gold jewellery for my wedding. I mean, I am in my early 30s and not even married yet and don’t have any plans to do so in the next few years. Perhaps, if I find someone worthy of my time and life but until then, NO.
The other day I saw my friend doing the same thing that our moms did. She bought a safe deposit locker in a bank and put all her gold jewellery in it and is buying more for her daughter. I mean, really? Let’s break this pattern already girls.
Buy all the jewellery you want to wear and to air it during the wedding season, but if you’re going to invest, there are better options than gold jewellery. I mean if you go out to resell that jewellery you won’t even get a reasonable price. The making charges will be cut, apart from what the jewellers call weight loss (not for you but the gold you are carrying – the only weight loss we don’t like).
At least buy gold bars instead of jewellery if you are looking to save for a rainy day.
Also, don’t forget the amount you invest every year in that locker you have rented in the bank — small amount but hey, when it comes to investing, every rupee counts.
And if you are not going to resell it then darling, that’s not an investment. That’s just plain hoarding and your love for glittery, shiny things.
I decided to invest in stocks instead. Not just stocks, but FDs, bonds, mutual funds, real estate, and so much more. I read on the internet, joined some classes, read some books and lo and behold; I was ready to invest.
I took baby steps at first. Why did I decide to invest in stocks and not in gold jewellery?
Did you know that there are tax benefits if you invest in shares instead of gold? Short term gains concerning gold are taxed at the rate of ordinary income tax. Dividend income on shares is exempted from tax and short-term gain on shares is taxable by 15%. So, if you are an income tax payer in the high-income bracket (30%), then stocks make more sense than gold.
Also, long term gain on gold has a tax rate of 20% and long-term gain on shares is only 10%.
Gold jewellery gives me skin allergy. No, it’s not a millennial thing. I literally break into hives when the nickel in that gold touches my skin. I would rather, it touches my bank account. The thing in India is unless we see it, we don’t believe it. So, we want to keep money in the bank because it makes us feel safe. We want to bury ourselves in gold because unless we feel its weight over our bodies, we don’t see its value.
Dollar Didi recommends gold ETF’s, gold bonds or gold mutual funds. Because darlings when it comes to investing in gold, go by the adage- All that glitters is not gold.
P.S. I don’t hate jewellery. Nor should you. But if you are investing, just diversify your portfolio. Have both – gold and stocks. Jewellery and ETFs. Expand your horizons beyond that jewellery and see your own stock rise.
Disclaimer: The content on koolkanya.com is for informational purposes only and should not be taken as professional financial advice. Please consult a financial advisor for the same.
