Published: 10 Sep 2018

Types of gold investment options for various types of investors

What type of investor are you? Prudent, risk-taker, strategist or optimist? There are many factors that determine how we invest: age, gender, family, past and present financial conditions, and future goals. Some of us even have an inherent investing/ risk appetite, while some don’t. A combination of these attitudes and expectations influence how we approach investing.

Here we categorize investors into four different groups, each with their own particular set of shared attitudes. Though there are behavioural, geographical and cultural differences, these categories have global relevance. Read on to discover what type of investor you are as it can help you understand where and how gold can be a part of your investment portfolio.

  1. Prudent delegators

    • Not very confident about your knowledge of financial markets
    • Rely on others’ guidance for investment decisions
    • Often delegate the management of their portfolio to others
    • Believe in investing for the long-term with minimal risk to capital

    According to an industry study, 17% of Indians are prudent delegators- those most likely to listen to professionals such as financial advisors or bank representatives.

    Indians are relatively risk averse but open to the stability that gold brings to their portfolio. Most add-ons to their portfolio would happen on recommendations and favourable information from professionals.

    The study further states that 37% of Indians purchase physical gold through a bank or other financial institutions.

    If you identify as a prudent delegator, you can look at investing in the Indian gold coin. It is the first ever national gold coin backed by the government and you can rest assured you own 24 karat gold of 999 fineness. Available in 3 denominations (5, 10 and 20 grams), the Indian gold coin can be bought at 480 branches of major Indian banks in more than 120 cities. Here’s everything you need to know about the Indian gold coin

  2. Risk-averse simplifiers

    • Aren’t particularly fond of financial markets
    • Think financial advisors are usually pushing their own agenda
    • Don’t want to risk their hard-earned money
    • Prefer to manage the investments themselves and turn to familiar, tangible and simple investment solutions

    Risk averse simplifiers account for 16% of Indian investors. They usually prefer more ‘conversational’ methods of gathering information. About 61% of Indians would speak to friends and family, and about 46% would gather information from social media and online forums.

    If you identify as a risk-averse investor, you can invest in physical gold. Its tangibility provides a sense of safety and security, and you can easily invest in it without having to go through extensive research. You could either go for gold jewellery or small gold coins, which are available in as low as 0.5g.

    Here's a guide to buying gold coins.

  3. Sophisticated strategists

    • Investing has a certain thrill to it, almost feels like a hobby
    • Value own knowledge and are confident of their investment instinct
    • Their portfolio consists of a mix of tactical and strategic investments
    • Regularly review the portfolio to ensure they maximise returns
    • People see them as influencers and seek their advice
    • Usually lead the way in considering new investment options

    This young Indian is extremely involved, technologically-engaged, has good faith in the economy and business. Forming the majority, 35% of Indians are sophisticated strategists.

    While only 13% of Indians have bought gold online, a majority of that number come from this category. If you too are willing to expand your horizons to newer, more modern ways to invest in gold, buying gold online is a convenient way to do so. Nowadays, mobile payment apps and wallets offer a way to buy digital gold seamlessly. It is 100% safe and you can buy 99.5% 24 karat gold with the click of a button. With digital gold, you don't need to save a lump sum amount as you have the flexibility to buy gold for as low as Re 1 or 0.001 grams.

    Related:Tips on buying gold online
  4. Connected optimists

    • Like to live in the moment
    • Want to see immediate gratification from your investments
    • Have faith in the economy and trust advisors
    • Are open to new ideas and investment opportunities

    Almost 32% of Indians are connected optimists. These people are heavy consumers of social media and will look to digital platforms as a key source of information and inspiration. Though not as risk-savvy as sophisticated strategists, people with these traits will move quickly in and out of investments based on the information they gather.

    If you believe you are a connected optimist, investing in gold ETFs could be the way to go as your investment will be backed by physical gold and you save yourself making charges. ETFs also provide an opportunity to avail tax benefits and are extremely convenient to invest in.

    So, which category do you belong to? Do invest in just the right product for you to maximise your returns and get peace of mind.

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