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“The desire for gold is the most universal and deeply rooted commercial instinct of the human race.” — Moutasem Algharati

Gold has long been considered a symbol of wealth and a hedge against inflation — an asset whose value tends to hold up when the purchasing power of money falls. Whether in the form of jewellery, coins or digital gold, it remains a popular investment choice in Indian households. Like any asset, gold prices fluctuate; while it offers no fixed returns, it is highly liquid (easily converted into cash) and carries meaningful capital appreciation potential — the possibility that its market price rises over time.

Investing in physical gold, however, carries significant drawbacks that are easy to overlook. A closer look reveals why it may not be the best fit for every portfolio:

• Zero passive income. Gold pays no dividends, interest or rent. You therefore miss out on the compounding power of reinvested income — the process by which earnings generate further earnings over time.

• Storage and security costs. Bank lockers and insurance premiums eat directly into your overall returns.

• Hidden fees and markups. Making charges on jewellery, transaction fees and dealer premiums often push your purchase price well above the spot price — the prevailing market rate for the metal itself.

• Lower long-term real returns. After adjusting for inflation, gold's returns have historically lagged growth assets, making it largely a wealth-preservation asset rather than a wealth-building one.

• Tax implications. Profits on gold are classified as capital gains — the taxable difference between your selling and purchase price — which further reduces net returns when you sell.

A Systematic Investment Plan (SIP) is a method of investing a fixed amount at regular intervals — typically monthly — instead of in one lump sum. A Gold SIP applies this discipline to gold: investors put fixed amounts regularly into gold-based schemes, gaining exposure to gold prices without buying the physical metal. Because purchases are spread over time, a SIP also reduces the impact of short-term price swings — you automatically buy more units when prices are low and fewer when they are high.

• Digital Gold SIP. You purchase small quantities of gold digitally, stored securely in insured vaults on your behalf. Once you accumulate a sufficient quantity, many platforms allow you to convert holdings into physical gold, offering flexibility based on your preferences.

• Gold Mutual Fund SIP. These funds invest primarily in gold or gold-related instruments and are managed by professional fund managers. They offer easy tracking, transparent NAV-based pricing — the Net Asset Value being the published per-unit value of the fund, calculated daily — and simple redemption whenever money is needed.

Gold deserves a place in many Indian portfolios — but as a stabiliser, not the engine. Its strength lies in preserving value during uncertain times, not in building long-term wealth. For most investors, a modest, disciplined allocation through a Gold SIP captures the benefits of the metal while avoiding the storage costs, markups and lump-sum timing risk of physical gold — leaving the heavy lifting of wealth creation to growth-oriented assets.

To know more visit: Know How to Invest in Gold Through SIP | Tata AIA — www.tataaia.com/blogs/financial-planning