comparison gold Vs share market: which is better for investment

The stock market index on a display screen at the Bombay Stock Exchange (BSE) building in Mumbai. After touching the 40,000-mark in morning trade, the BSE Sensex turned choppy after Finance Minster Nirmala Sitharaman rose to present her maiden Budget.Photo) (
Traditionally speaking, Indian investors have been investing in physical assets. Nowadays, we witness a gradual shift to investing in financial assets. When we need to compare between investing in gold and stock market, we must consider several aspects. In both these cases, the investors invest when the prices are low and hold them till the prices rise to expected levels. While investing in stocks, usually investment is made when the valuations are high and during the phase of correction, the investors do not wait till the markets recover. Hence they end up suffering losses by selling the stocks at a lower rate.

Approaching the price rise and fall

When we look at these two kinds of investments, we find that the basics remain the same for both gold and stock investments. Both the prices of gold and stocks are cyclical in nature and go up and down depending on several factors. The main difference between these two kinds of investments is that gold prices might go up when the stock prices suffer and gold prices might fall while the stocks perform well. This is because gold is always viewed by people as a safer investment option and hence they rush to invest in gold when the economy slumps.


At a time when economies are in the middle of a kind of struggle, stock prices become cheaper and gold prices become expensive. During that time, if the investors shift from stocks to gold, there would be heavy losses.

Thumb rule you must follow

The present market condition is characterized by a fall in stock prices across a number of industries. Gold is selling at prices that are all time high. Hence it is advisable that both these investments are not linked to each other. It is a good option to shift from stock investment to gold investment right now. To make a prudent decision, it is good to consider which is cheaper and which is expensive before investing. It is necessary to understand the investment basics to be able to invest in the right asset that will meet your investment goals. The thumb rule here is to invest in whichever is cheaper and avoid investing in whichever is expensive.


Word of caution

It is always a good idea not to invest a huge amount in lump sum whether it is invested in gold or stocks. The best approach to investing in gold and stocks is to go for periodical investments in a diversified manner or resort to a systematic investment plan (SIP) in a diversified portfolio of stocks. Also, learn to understand the market trend and take the right decision accordingly. Your investment can give you the desired results only when you are quick to rise up to the market situation especially during some crucial times. At times, you might need to wait for quite a long time for the stocks to recover in a struggling market. So, make the right decision after studying the contemporary trends while making the investment.