Is Gold the Millennial Way of Investing

Every generation has its own investment preferences and strategies. For millennials, gold investments seem to be a popular option when it comes to hedging inflation. For the uninitiated, millennials are those born between 1986 to 1996. The stability of gold has attracted most millennials who have dedicated a certain proportion of their portfolios to gold investments. However, unlike the previous generations, millennials don’t focus on adding gold ornaments as investments. Instead, they have adopted new ways of investing in the yellow metal. This article outlines how millennials are investing in gold to shield their yields against inflation.

• Millennials are investing in gold through gold mutual funds and gold ETFs.
• Digital gold is also gaining popularity among millennials.
• Millennials also prefer to invest in gold through SGBs.

Gone are the days when investing in gold meant buying and hoarding physical gold jewellery. Today, millennials are investing in gold in a range of different ways without the need to stockpile physical gold. Here’s a list of ways millennials are investing in gold:

Mutual funds

Mutual funds have gained immense popularity among millennials as an easy and diversified way of investing in the stock market. Apart from equities and fixed-income debt assets, MFs also invest in gold. In fact, millennials are investing in gold mutual funds to purchase funds that invest primarily in gold and gold-related assets. Generally, such funds invest in gold indirectly by buying stocks of mining companies, gold-producing and distributing companies or directly by investing in physical gold. Gold MFs are ideal for investors who are investing for a long-term horizon and are looking to add diversification to their portfolio.

Gold ETFs

Gold ETFs are exchange-traded funds that invest in gold bullion. The prices of gold ETFs depend on the price of physical gold. In other words, gold ETFs track the price of gold, just like other ETFs track the performance of a specific stock index. Gold ETFs are the millennial way of investing in gold because ETFs are traded conveniently on stock exchanges and involve nominal asset management charges. This means millennials need not worry about physically storing the gold or paying hefty making charges (applicable on jewellery).

Digital gold

Another popular millennial way of investing in gold is buying digital gold. Digital gold is gold that’s bought, sold, and stored electronically. Digital gold can be purchased through authorised platforms like e-commerce sites, payment platforms, and banks. The primary advantage of digital gold is the ability to buy in small quantities, starting from just Rs. 1 onwards. Additionally, investors can opt for SIP investments in digital gold, where they can purchase gold conveniently through monthly instalments. Adding to this list is the ease of exchanging digital gold for physical gold, coins, and bullion. All this makes digital gold a preferred millennial way of investing in gold.

Sovereign gold bonds (SGBs)

Millennials also prefer to invest in gold through SGBs issued by the RBI on behalf of the Indian government. SGBs are issued in tranches and offer a good alternative route to investing in the hedging asset. The price of an SGB is determined on the basis of the price of 99.9% pure gold. These investments come with a tenure of 8 years. However, investors can withdraw after the 5th year.

Physical gold

Apart from all the new-age ways of investing in gold, purchasing physical gold is still a popular option among a sizable millennial segment. Millennials who prefer looking at gold as an investment, as well as an adornment, tend to prefer investing in gold by purchasing physical ornaments. However, millennial investors who prioritise the long-term investment value of gold over its dual appeal prefer purchasing gold bars and coins as they avoid a decline in resale value and expenses on one-time making charges.

In a nutshell, the shine of the precious yellow metal has not faded away for millennial investors. Much like prudent investors before, millennials have identified the hedging value of gold and are investing in it in various ways. Ditching the physical gold jewellery approach, most millennials are adding gold to their portfolios through mutual funds, ETFs, and SGBs, while others are siding in favour of digital gold and solid 24k coins and bars. As time progresses, experts predict this gold rush will continue, with more millennials opting for the yellow metal to hedge their portfolios.

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