Equity or Jewellery: What if you had invested Rs 1 lakh in gold versus stock of Kalyan Jewellers last Diwali?

Investing is a crucial aspect of personal finance, and when it comes to making decisions on where to allocate your hard-earned money, there are numerous options to consider. Diwali, the festival of lights, is a time when many individuals in India contemplate financial investments. One of the classic choices for investment has always been gold. In this article, we will explore the potential outcomes of investing Rs 1 Lakh in gold compared to purchasing the stocks of a company involved in the manufacture and sale of a range of gold and other jewellery products. Let’s consider a company like Kalyan Jewellers for this article. We will analyse the performance over the past year and discuss the factors that can influence your decision. 

Investing in Gold 

Gold has been a store of value for centuries, and it remains a popular choice for investors looking to preserve their wealth. Gold prices tend to rise during times of economic uncertainty or inflation, making it a hedge against such financial challenges. The price of gold is influenced by a myriad of factors, including geopolitical events, economic indicators, and investor sentiment. 

In the past year, the price of gold has experienced fluctuations, driven by global economic conditions. To determine how your investment in gold would have fared, you would need to consider the purchase price of gold on Diwali last year and the current market price. 

Investing in Kalyan Jewellers: 

Investing in a company like Kalyan Jewellers, on the other hand, is a different form of investment. When you invest in a specific business, you become a shareholder, and your returns are dependent on the company’s performance. Kalyan Jewellers is one of the well-known jewellery retailers in India, and the performance of their stock can be influenced by various factors, including company financials, management, market conditions, and consumer demand for jewellery. 

Analyzing the returns: 

To determine the outcome of both investment options, we first need to check the historical prices of these investment alternatives: gold and the stock price of Kalyan Jewellers during Dhanteras last year. In the year 2022, we celebrated on October 24, and we typically buy gold on Dhanteras, so we will consider the price on that auspicious day. 

During the last year on Dhanteras, gold was priced at Rs 50,626, and as of writing this article, it is trading at around Rs 60,408, representing an impressive return of 19.3%. This means your investment of Rs 1 lakh has grown to Rs 1.19 lakh. 

On the other hand, the share price of Kalyan Jewellers was Rs 100 per share during Dhanteras last year. The current market price, as of writing this article, is Rs 345 per share on the NSE, delivering a whopping return of around 235% to its investors during the same period. This means the investment of Rs 1 lakh would now be valued at Rs 3.35 lakh. 

However, both options have their features. Gold is a physical asset that can be touched and even worn, while stocks are intangible and stored in a Demat account. One significant disadvantage of investing in stocks is the need to choose a good company, which depends on their financial performance, management, and many other factors. 

In conclusion, both investment options have their advantages and disadvantages, and the choice ultimately depends on a person’s beliefs and preferences. However, in terms of capital appreciation, especially investing in Kalyan Jewellers, would have proven to be a better choice last year. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions