Gold leasing: Everything you need to know
Gold has always been a popular investment choice due to its stability and ability to protect against market volatility. A majority of smart investors allocate a part of their portfolio into gold. Historically, gold has given 11% returns per annum and has been treated as a hedge against inflation & market crashes. Since it doesn’t give returns as high as some of the other popular assets, people do not treat it as a primary investment. But, what if there was a way to earn an additional interest on Gold? With the introduction of digital gold leasing, investors have the opportunity to make their gold work for them by earning extra 5% assured returns(in the form of Gold) on their existing gold investments. This additional 5% gold combined with 11% returns from their leased gold results in 16% returns.
What is digital gold leasing?
Digital gold leasing is a process by which investors can lease their digital gold to jewelers. These jewelers use it to create physical gold products such as jewelry as per their business needs. In exchange for the use of this gold, the jewelers pay the investors 4-5% interest in the form of Gold.
This can be done through apps like Gullak Gold+, where users can start leasing with as low as 1gm of Gold. Digital gold leasing can be an attractive option for investors looking to earn higher returns on their investments. It allows them to leverage the value of their digital gold holdings without having to sell it outright, and the rental gold payments can provide a steady stream of income.
How can you make your Gold work for you?
One unique feature of this investment strategy is that the returns are paid in the form of gold rather than cash. Which means that your Gold is growing over time.
Eg: If you lease out 100gm gold, by the end of the year, you will have 105 gms(extra 5% from leasing) which means 105gm will get the benefit of 11% predicted appreciation of gold price instead of 100gms making an overall yearly return of 16%.
Understanding the power of compounding:
One of the key benefits of digital gold leasing is the power of compounding. The power of compounding refers to the idea that the returns on an investment can be compounded over time, leading to significant growth in the value of the investment. In simple words, compounding refers to reinvestment of interest from any investment generating significantly higher returns; thus, the power of compounding helps grow your wealth over time.
Here is a table to illustrate the power of compounding and how Gold+ makes your Gold grow over time.
|
|
Digital Gold Assuming 11% Gold price appreciation |
Gold + (5% extra gold pa) |
|
Year 0 |
57,780 |
10gms - 57,780 |
|
Year 1 |
64,136 |
10 Gms + 0.5 Gms Extra Gold 10.5gms - 67,342 |
|
Year 2 |
71,191 |
10.5 Gms + 0.53 Gms Extra Gold 11.03gms = 78,488 |
|
Year 5 |
97,363 |
11.03 Gms + 1.73 Gms Extra Gold 12.76gms = 1,24,262 |
|
Year 8 |
1,33,156 |
12.76 Gms + 2.01 Gms Extra Gold 14.77gms - 1,96,732 |
As you can see, returns from Gold+ beat returns from Gold by 47%. It is crucial to note that the power of compounding is dependent on a number of factors, including the rate of return on the investment, the frequency of reinvestment, and the length of time the investment is held.The longer you stay invested, the higher the returns.
Conclusion
Digital gold leasing offers investors the opportunity to earn higher returns on their existing gold investments and grow their wealth over time through the power of compounding. With the added benefits of 5% extra gold & no lock-in period, digital gold leasing has become a lucrative and a primary vehicle of investment rather than just being an instrument to offer diversification to your portfolio.
