Dhanteras Alert: The Shocking Truth About Buying Gold Jewellery This Diwali

With Dhanteras and Diwali around the corner, it's that time of the year when people rush to buy gold jewellery. Many of us consider gold as a safe-haven investment and a status symbol. However, before you make a beeline for the nearest jewellery store, take a moment to think: are you buying gold as a fashion statement or as an investment? The answer might surprise you.

While there's nothing wrong in buying gold jewellery, especially during festive seasons, it's essential to distinguish between its value as a fashion item and its worth as an investment. Gold jewellery is often perceived as a symbol of wealth and prosperity. It's no surprise that many of us buy gold ornaments during Diwali, considering it as an auspicious way to kick-start the festive season.

However, the harsh reality is that gold is not an asset that generates any earnings. Unlike other investment instruments such as stocks, mutual funds, or fixed deposits, gold doesn't offer any dividends or interest. In other words, merely holding gold won't make your wealth grow.

Furthermore, the transactional costs involved in buying and selling gold, especially in the form of jewellery, are exorbitant. When you buy gold jewellery, you pay a significant amount as making charges, which can range from 10-30% of the total cost. Additionally, when you sell gold jewellery, you'll likely receive a lower price due to these high making charges being deducted from the total amount. These charges eat into your returns, leaving you with a raw deal.

Another misconception about gold is that its appreciation in value is equivalent to earning a return on investment. While it's true that gold prices tend to appreciate over time, this appreciation is largely due to inflation. Therefore, the real return on investment, or the return after adjusting for inflation, is too small to be of significant consequence.

So, what does this mean for you as a buyer? It's essential to treat gold jewellery as an item of consumption, similar to clothes, shoes, bags, or any other fashion accessory. When you buy gold jewellery, consider it as an expense rather than an investment. This mindset shift will help you make more informed purchasing decisions and avoid any potential financial pitfalls.

That being said, if you're still keen on buying gold this Diwali, go ahead. Just make sure to set aside the money specifically for this purpose, and don't compromise on your other financial goals. Wear your gold jewellery, take pride in it, but avoid making the common mistake of mistaking it for a prudent investment.