Every Indian entrepreneur has, at least once, faced the question ‘Are you sure about this?’ from a concerned elderly family member. Trading cushy salaried jobs to follow the entrepreneurial dream is indeed a risk that, while worth taking, comes with more challenges than the regular nine-to-five stint. And at the fulcrum of most of these challenges is money.
From breaking fixed deposits to scurrying around for procuring business loans, or hesitantly borrowing from friends and family, entrepreneurs face tough times financially, not just at the start, but also well into the next couple of years. As most start-ups take years to find their footing and start making profits, they may find themselves constantly financially challenged. Add to that the delay in concrete future planning due to the gap years of low or no funds inflow. These factors may cumulatively affect the overall financial standing, which is why it’s even more important for entrepreneurs to have a well-crafted long-term investment plan, both for the business and themselves.
What should an entrepreneur’s investment portfolio look like?
Entrepreneurs need to have a diversified portfolio with the right mix of high-risk-high-ROI and safer instruments. But should entrepreneurs be investing in high-risk options when they are already plagued with money woes? Since we’re considering it from a long-term perspective, stocks are a noteworthy fit here as they can be played around with during periods of favourable changes over an extended duration. And also while they may be tempted to avoid all risks, a little calculated risk can yield higher returns to tackle short-term exigencies.
However, given how unprecedented situations, such as the current global pandemic has changed the face of businesses, prompting various start-ups and even established companies to either halt operations or completely shut shop, it is important to have a sound investment strategy. And the yellow metal – gold – has stood the test of time, living up to its identity of a safer and resilient investment choice. In fact, gold acts more as a hedge than an instrument. While stock investments give you equivalent ownership of the company and bonds elicit a payable interest, gold, on the other hand, safeguards against economic inconstancy.
For instance, during last year’s peak pandemic period, while the volatility of the stock market had every investor on their toes, the value of gold jumped from Rs. 39,100 to Rs, 52,300 between January and October 2020. This establishes that gold finds preference in every entrepreneur’s investment portfolio.
But why digital gold?
As the median age of investors changes, so does their mode of investment. Traditional investment avenues are soon becoming obsolete, thanks to digital natives who want everything at the click of a button. Besides convenience, owning physical gold comes with security and safety risks and added expenses. The owner has to either find trustworthy gold vaults in banks and other financial institutions and they always come at a premium. The other option is to live in constant fear of the safety of stored gold at home. does away with these concerns and also omits the commission charges associated with physical gold bought from dealers. If you need more reasons, there’s a big one – making charges! On every piece of gold jewellery you pay steep making charges, while on digital gold there’s none!
The authenticity and purity of physical gold are also questionable, whereas, digital gold from MMTC-PAMP carries a 99.999% purity grade, thereby yielding the highest return value. Digital gold is also easier to transact in or liquidate, which translates into instant funds in times of contingencies- something start-ups need to unquestionably account for.
A smart investor must be cautious yet open to change, and the investment portfolio should mimic this attitude. A diversified portfolio with constant fidelity to gold as some percentage of the total could lead to a fantastic long-term payoff that enables solidifying and expanding from the business standpoint, and creating financial stability, from the entrepreneur’s standpoint.