When it comes to investing, Indians love buying gold. But on some festive days like Dhanteras, it is considered auspicious to buy all things gold. Be it jewellery, gold bars, or gold coins, people buy gold in all forms and sizes. And with the festive season just around the corner, gold buying is expected to see a spike again.
Will you be joining the festive frenzy too? Well, if a shortage of funds is holding you back, you might want to consider taking a personal loan.
Is gold a good investment?
In India, the demand for gold rises every year ahead of Diwali and Dhanteras. In spite of the high prices, people purchase gold jewellery for different purposes, including weddings and other festive occasions. Thus, gold has a sentimental value for most Indians and is the preferred form of investment for many.
Moreover, it makes sense to invest in gold when inflation rates are high. Another benefit of having physical gold is that you can take a gold loan in the future. Since they only require basic documentation, the disbursement usually happens in a few hours. In the future, if you ever need funds urgently, you can compare gold loans vs personal loans and pick the loan product that suits your requirements.
According to financial experts, gold can also be a fruitful investment if you hold it for an extended period, but it shouldn’t form a significant part of your investment portfolio. It can certainly fulfil the need for diversification in your portfolio.
Should you borrow a personal loan to purchase gold?
In 2012, the Reserve Bank of India (RBI) banned lending institutions from extending loans to their borrowers for buying gold in any form. The central bank took the step due to the increase in the import of gold in the country. However, this does not mean that you cannot take a loan to buy gold in India. You can still borrow personal credit to invest in gold, but only after knowing the risks involved.
A critical factor that you must know before taking a loan for gold investment is that the gold commodity market is prone to fluctuations and even unpredictable changes. And if the prices drop considerably, you may struggle to repay your loan.
Also, before borrowing a loan to purchase gold, consider your credit score and history. Your credit score can reveal a lot about your repayment capacity and influence the personal loan interest rates.
In a nutshell
Just like any other financial product, investing in gold has its pros and cons. And borrowing a loan for this investment can be a good decision if you know the risks and have a sound financial plan.
Lastly, if you wish to purchase gold this Dhanteras but don’t have enough funds to spare, turn to Tata Capital. We understand the value of gold in an Indian household and offer personal finance schemes that can help you invest in gold. Just check your personal loan eligibility on our website and apply for the loan online.
To learn more about our loan offerings, reach out to us today!