CONSIDER INVESTING IN OUR ELITE EQUITY PORTFOLIO RATHER THAN PURCHASING GOLD THIS AKSHAYA TRITIYA!

WHAT IS IT ABOUT AKSHAYA TRITIYA AND GOLD?

An age-old ritual associated with the auspicious day of Akshaya Tritiya is of buying physical gold. Buying gold and bringing it home is a way of welcoming Lakshmi, the goddess of wealth and good fortune, to your house.

The compulsion to buy gold, despite the metal’s steep price, and the expenses and risks involved, demonstrate some clear flaws in the way investors or buyers think. Our generation seems to be playing a broken telephone game with previous generations by investing in gold. The words were “wealth creation” and “prosperity” when the game started. Today’s generation hears “gold”. And the fault here is not entirely ours.

A fair share of the blame can be transferred to smart marketing agencies and their tactical gimmicks associating gold as the sole vehicle of welcoming goddess Laxmi home. We have become used to being fed the line that “gold is the best investment” for years now. Just like owning a home is part of the American dream, owning gold is part of the Indian dream.

India’s love of gold is not new. It’s almost a religion. Ajay Mitra of the World Gold Council once famously: “If India sneezes, the gold industry will catch a cold.”

We agree that buying gold is not a mere vanity but an investment and empowers you with financial security. But it is difficult to believe it is the best investment for wealth creation and prosperity. Allow us to demonstrate the notion, “All that glitters is not gold” to you.

WHY PHYSICAL GOLD JEWELLERY AS AN INVESTMENT DOES NOT MAKE SENSE

Making charges: Making charges, often called wastages, are added to the final cost of the jewellery, excluding the 3% Goods and Services Tax (GST). The more delicate and intricate the gold jewellery design, the higher will be the making charges.
Locker charges: Banks charge anything between ₹1,500 and Rs.25,000 excluding GST as an advance rental fee annually for storing jewellery. And also, every time you need your jewellery, you need to rush to your bank locker. Which, again, puts a big question mark on the safety of the gold.
No passive income: Many financial experts, including veterans like Warren Buffet, believe that investments should create revenue. Gold does not meet this criterion because it does not generate any value while it is owned. Equities, for example, allow you to have a consistent passive income in the form of dividends.
Gold is less liquid: Gold is less liquid than other investment. That apart, gold jewellery has an emotional value more than the economic one. Thus, the call to sell jewellery does not come easy. And when you decide to sell, it’s not easy to dispose of.
Dependence on international markets: Gold prices fluctuate and they are volatile. They are highly dependent on international markets. The US dollar plays a vital role in gold prices. Further factors like demand and supply, inflation, crises, and interest rates also play a role.
Taxation: Gold sold after three years is considered long-term, and long-term capital gains are taxed at 20%. Short-term capital gains are added to your income and taxed according to your tax bracket.

WHY ELITE EQUITY PORTFOLIO WORKS BETTER THAN GOLD?

Stability and Consistency:High-quality businesses (stocks) in our elite equity portfolio are fundamentally strong, with solid revenue streams, healthy balance sheets, and established market positions. Companies tend to weather economic downturns better than others, providing stability to your investment portfolio.
Capital Appreciation: While stability is important, the stocks have the potential for long-term capital appreciation. The companies often have a track record of growth and continue to expand their market share and profitability over time, which in turn leads to an increase in price growth.
Lower Risk: Investing in our elite equity portfolio can mitigate some of the risks associated with investing in the low-quality stocks. Since the companies are generally financially stable, they are less likely to experience sharp price declines compared to riskier category.
Resilience in Market Downturns: During periods of market volatility or economic recession, our high-quality elite equity portfolio tends to hold up better than lower-quality stocks, providing a cushion against broader market declines.
Lower Transaction Costs: Constantly buying and selling stocks can rack up transaction costs in the form of brokerage fees and taxes. We at Sukhanidhi do not churn our portfolio frequently, which results in fewer transactions, reducing these costs and potentially improving your net returns.
Peace of Mind:Knowing that you’re invested in portfolio of companies with strong fundamentals can provide peace of mind, allowing you to focus on your long-term financial goals rather than worrying about short-term market fluctuations.

Our elite equity portfolio overcomes almost all of the drawbacks of gold. Additionally, businesses (stocks) that form part of our elite equity portfolio possess the following characteristics:

Sustainable long-term business models
Credible and long track record of profitability
Robust predictable cash flows
Justifiable high return on capital
Powerful growth potential and economic moat
Honest and capable management
Healthy profit margins and solid balance sheets

Our Elite Equity portfolio offers reduced volatility, provides downside protection, entails low risk, and consistently generates inflation-adjusted, risk-adjusted, tax-efficient returns over the long term. due to which it tends to outperform gold and sensex in the last decade. Please refer to the table below.

About Author

Vinayak Savanur

Founder & CIO at Sukhanidhi Investment Advisors, a SEBI registered equity investment advisory firm. He has nearly a decade of experience in the stock markets and has been a holistic financial planner.