In India, gold is not just a precious metal—it is a tradition, a status symbol, and for many, a way to secure their financial future. People buy gold during weddings, festivals and also as an investment for long-term wealth. However, despite its popularity, there are many misconceptions and false beliefs about gold investment. These myths can lead to poor financial decisions or missed opportunities. It is important to separate facts from fiction to make the right investment decisions.
In this article, we will break down 5 major gold investment myths that most people believe and reveal the actual truth behind them in simple language.
Myth 1: Physical Gold Is the Only Safe and Real Investment
What People Think
Many people believe that buying physical gold—like gold coins, jewellery, or bars—is the only safe and real way to invest in gold. They think that unless they can touch and feel the gold, their investment is not secure. This belief is very common in older generations, where lockers full of gold ornaments are seen as a sign of wealth.
What’s the Reality?
While physical gold has emotional and cultural value, it is not always the smartest investment option. There are hidden costs involved such as making charges, storage expenses, and risk of theft. Moreover, when you sell gold jewellery, you may not get the full value due to weight deductions and melting loss.
Today, several modern and secure alternatives are available:
- Sovereign Gold Bonds (SGBs): Issued by the Government of India, they give 2.5% interest per year apart from gold price appreciation. Also, no capital gains tax if held till maturity.
- Gold ETFs and Mutual Funds: These are traded on stock exchanges and offer good liquidity and transparency.
- Digital Gold: Allows you to invest in gold through online platforms in small amounts.
These options are regulated, more liquid, and often better in terms of long-term returns.
Myth 2: Gold Prices Always Go Up
What People Think
Many investors assume that gold prices only rise over time and never fall. This belief comes from the fact that gold is considered a ‘safe haven’ during economic crises. Hence, people think investing in gold is completely risk-free and guaranteed to grow.
What’s the Reality?
Gold does not give guaranteed returns. Yes, gold often performs well during uncertain times, like inflation, recession, or global tensions. But its price also fluctuates due to several factors:
- Interest rates in the economy
- Movement of US Dollar
- Global demand and supply
- Government policies and import duties
- Stock market performance
In certain periods, gold has remained flat or even fallen. For example, between 2012 and 2018, gold prices were almost stagnant or declining in many countries. So, it is not wise to expect only upward movement. Gold is not a growth asset like equities but more of a protection against inflation and volatility.
Myth 3: Gold Is the Best Long-Term Investment
What People Think
Gold is often viewed as a long-term wealth creator. People believe that holding gold for 10-15 years will always generate better returns compared to other investments like stocks or mutual funds. It is considered a perfect retirement asset by many families.
What’s the Reality?
Gold is a stable asset, but it is not the highest-returning one. If we compare gold with equity markets over the long term, equity has always outperformed gold. Here’s a rough comparison of average returns:
- Gold: 7–8% average annual return (over the last 20 years)
- Equity Mutual Funds/Nifty 50: 12–15% average annual return
Gold helps in diversifying a portfolio and reducing risk, but it should not be your primary investment option for long-term growth. Financial planners usually recommend keeping 5% to 10% of your total investment in gold, not more than that. Over-relying on gold can reduce your overall wealth creation potential.
Myth 4: Buying Jewellery Is a Great Investment
What People Think
In Indian households, gold jewellery is seen not only as an ornament but also as an investment. During weddings and festivals, families buy heavy jewellery and consider it part of their financial assets. It’s common to hear statements like, “Jewellery is never a waste of money.”
What’s the Reality?
Gold jewellery is more of a consumption item than an investment. When you buy gold jewellery, a large part of the cost includes:
- Making charges (ranging from 5% to 25%)
- GST (3% on the final price)
- Wastage charges in traditional jewellery
When you sell jewellery, you lose the making and wastage charges. Many jewellers also deduct weight for stones or design elements. You rarely get the full value of what you paid. Also, old jewellery may go out of fashion or lose shine, further reducing its resale value.
If your goal is to invest in gold, it’s better to choose gold bars, coins (from banks or authorized dealers), or digital gold instead of heavy ornaments.
Myth 5: You Must Buy Gold Only on Auspicious Days
What People Think
In India, it is widely believed that gold must be purchased only on auspicious occasions like Akshaya Tritiya, Dhanteras, or during festivals. Many people avoid buying gold on regular days, thinking it will not bring good luck or growth.
What’s the Reality?
While cultural beliefs and traditions are important, investment decisions should be made based on financial logic, not just rituals. On auspicious days, demand for gold increases sharply, and prices often rise due to festive premiums. Retailers may increase making charges or reduce discounts because people are emotionally driven to buy.
Instead, a smart investor should look at:
- Current gold prices and trends
- International gold rates
- Future price expectations
- Best available form of investment (SGB, ETF, Digital Gold)
- Personal budget and financial goals
You don’t have to wait for a specific date to invest in gold. Regular and disciplined investing is always better than emotional buying. Even SGBs are released in different tranches during the year and offer better value than festive jewellery shopping.
Why Understanding These Myths Matters?
Investing in gold is not wrong—it is, in fact, an important part of a well-balanced portfolio. But blindly following myths can lead to poor decisions and losses. For example, buying jewellery thinking it’s a smart investment, or keeping all your savings in gold expecting high growth, can disturb your financial planning.
By understanding the reality behind these common myths, you can make smarter choices. You’ll know when to buy, how much to invest, and which form of gold is best suited to your needs. You can balance your emotions, traditions, and financial goals better.
Many financial advisors suggest a mix of assets like equity, debt, and gold for long-term wealth creation. Gold works best as a hedge against inflation and for diversification—not as the only or the best investment. Use gold wisely and with correct information, and it can surely support your future in a meaningful way.
