Gold - A wealth creator
For centuries, gold has been considered a symbol of security & prosperity. Indians buy or present gold extensively on important occasions, be it a wedding or some religious festival. It is considered to be one of the safest forms of storing wealth. These aspects of Indian culture has made India the world's largest consumer of gold (source: World Gold Council). Gold is considered as a safe haven for the future as it is valued as a savings vehicle and is one of the preferred investment avenues.
Why invest in gold?
Safe Haven:
Gold is considered as one of the most pure, safe and secure form of storing wealth. Infact, Gold can also be used as a mortgage against a loan or can be sold to sail through uncertain times.
Consistent asset class:
Gold as an investment asset has given positive returns (in USD) for each calendar year during the last decade outpacing most of asset classes.
Hedge against other asset class:
Gold, as an asset class has low correlation with other asset classes like equity and bonds. It has low correlation with economic downturn in volatile times and is a good hedge against inflation. Coupled with strong appreciation for over a decade, Gold has emerged as an important asset class for investments in one's portfolio.
Diversification:
Easy and convenient way to diversify one's portfolio.
Safe Haven:
Gold is considered as one of the most pure, safe and secure form of storing wealth. Infact, Gold can also be used as a mortgage against a loan or can be sold to sail through uncertain times.
Consistent asset class:
Gold as an investment asset has given positive returns (in USD) for each calendar year during the last decade outpacing most of asset classes.
Hedge against other asset class:
Gold, as an asset class has low correlation with other asset classes like equity and bonds. It has low correlation with economic downturn in volatile times and is a good hedge against inflation. Coupled with strong appreciation for over a decade, Gold has emerged as an important asset class for investments in one's portfolio.
Diversification:
Easy and convenient way to diversify one's portfolio.
Gold - A consistent performer
Gold has delivered consistent returns of over 19% in various time horizons as shown in the graph below.
Gold has delivered consistent returns of over 19% in various time horizons as shown in the graph below.
Source: Bloomberg. Returns are in CAGR. Return of Gold in USD as on July 29, 2011. Past performance may or may not be sustained in future.
SIP in Gold
SBI Gold Fund enables you to invest in gold through Systematic Investment Plan (SIP), thus inculcating a regular savings habit to your investments. This ensures that you can reap the benefits of investing in gold through a small but regular amount. The following table shows the SIP returns in Gold for the past 10 years. It is seen that Gold has displayed a consistency in performance.
SBI Gold Fund enables you to invest in gold through Systematic Investment Plan (SIP), thus inculcating a regular savings habit to your investments. This ensures that you can reap the benefits of investing in gold through a small but regular amount. The following table shows the SIP returns in Gold for the past 10 years. It is seen that Gold has displayed a consistency in performance.
| Period | 1 Year | 3 Years | 5 Years | 7 Years | 10 Years |
|---|---|---|---|---|---|
| Amount Invested | 60,000 | 180,000 | 300,000 | 420,000 | 600,000 |
| SIP Start Date | 01/08/2010 | 01/08/2008 | 01/08/2006 | 01/08/2004 | 01/08/2001 |
| Gold Price (Rs/Gm) (As on July 29, 2011) | 2292.98 | 2292.98 | 2292.98 | 2292.98 | 2292.98 |
| Total no. of units accumulated | 30 | 110.98 | 233.55 | 411.97 | 767.04 |
| Investment value (as on July 29, 2011) in Rs. | 68,797.16 | 254,483.35 | 535,535.46 | 944,640.43 | 1,758,806.03 |
| Returns on SIP in Gold (%) | 28.63% | 23.94% | 23.44% | 22.80% | 20.41% |
Source: Bloomberg. Returns are as on 29/07/2011 with SIP being done on 1st of every month. Returns are CAGR & have been calculated for cash flows at different point of time using XIRR function in excel spreadsheet for LBMA AM Fix closing prices converted into INR. Past performance may or may not be sustained in the future.
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