Gold or Fixed Deposits: What’s the Better Hedge Against Inflation in 2024

Inflation is an economic phenomenon that occurs when the price of goods and services rise over time. While moderate inflation is healthy for the economy, hyperinflation can be harmful to consumer purchasing power and savings. Therefore, investors are always looking for a safe haven that can hedge against inflation. Two such options are gold and fixed deposits. In this article, we’ll explore which is the better option for investors in 2024.

Gold as an Investment Against Inflation

Gold has always been considered a safe haven for investors. It’s a precious metal that has the potential to hold its value and maintain its purchasing power even during times of economic uncertainty. Here are some of the benefits of investing in gold as a hedge against inflation.

1. Positive Correlation with Inflation

Gold has a positive correlation with inflation. In other words, as inflation rises, so does the price of gold. This makes it a great investment option to hedge against inflation.

2. Low Correlation with Other Assets

Gold has a low correlation with other assets like stocks and bonds. This means that gold can help you diversify your portfolio, resulting in reduced risk of overall loss.

3. Tangible Asset

Gold is a tangible asset that you can see, touch, and hold. Unlike other investments, gold has intrinsic value that is not dependent on the performance of a company or the market.

While gold may seem like a great hedge against inflation, there are some downsides to investing in it. One is the storage and insurance costs associated with owning physical gold. Additionally, fluctuations in gold prices can be quite volatile, resulting in potentially large gains or losses for investors.

Fixed Deposits as an Investment Against Inflation

Fixed Deposits (FDs) are another popular investment option for those seeking steady, predictable returns without too much risk. They are a great option for short and long-term savings where one can easily invest a lump sum amount and earn a fixed rate of interest for the fixed tenure. Here are some of the benefits of investing in FDs as a hedge against inflation.

1. Guaranteed Returns

One of the most significant benefits of FDs is the guaranteed returns they offer. Unlike gold, the return on FDs is guaranteed and predetermined, providing a sense of stability to the investor.

2. Higher Interest Rates

FDs offer higher interest rates compared to savings accounts. With the recent new rates up to 8.85% p.a. on Digital FDs, that too only applicable for customers booking FD online (App/Web), Bajaj Finance offers some of the best FD rates in the market.

3. Flexible Tenure

FDs offer a wide range of tenures, from as little as 12 months to as much as 60 months, catering to a wide range of investor goals. Additionally, FD calculator monthly investment helps investors calculate their estimated maturity amount and interest earned based on the tenure and investment amount.

While FDs may seem like an excellent hedge against inflation, there are some downsides to investing in them. One drawback is that they offer limited returns compared to other investment options like stocks or mutual funds. Additionally, FDs are susceptible to inflation risk, which means that the real value of your investment could decrease over time if inflation rates rise.

Another advantage of investing in fixed deposits instead of gold is that FDs are easier to liquidate. In times of financial emergencies, it can be tough to get your hands on the cash you need, especially if you own physical gold. Selling gold to acquire liquidity can sometimes be a challenging task as it involves finding a trusted buyer.

With fixed deposits, there are no such concerns as you can break your FD with a small penalty fee and get your cash almost immediately. This feature ensures that you have access to your funds whenever you need them. Besides, banks provide nomination facilities where you can nominate any individual to receive the proceeds of your FD in case of an unforeseen event, ensuring that your financial future is secure.

Inflation is a reality that can impact the economy’s purchasing power, and investors must choose an investment instrument that will help them maintain their financial stability in times of inflation. While gold has been historically regarded as the ultimate hedge against inflation, the scenario in 2024 has changed significantly with fixed deposit rates reaching an all-time high.

Digital fixed deposits, like those offered by Bajaj Finance, have become increasingly popular due to their high-interest rates, easy liquidity, and flexible tenures. As markets continue to fluctuate, it is prudent to invest in safe investment options to hedge against inflation and secure your financial future. Therefore, it is essential to consider investing in fixed deposits over gold, especially with Bajaj Finance offering new rates up to 8.85% p.a. on Digital FDs. By investing in it through their app or website, you can earn higher returns while securing your future, thus, subtly nudging the customers to download the app.

Gold or Fixed Deposits: Which is Better as a Hedge Against Inflation in 2024?

When it comes to choosing between gold or fixed deposits as a hedge against inflation in 2024, there is no clear winner. It depends on your investment goals, risk tolerance, and the prevailing market conditions. While gold has traditionally been considered a safe haven against inflation, fixed deposits like those provided by Bajaj Finance, can provide a better hedge for those who don’t want to take on too much risk.

Investing in FDs can help you earn consistent returns without being impacted by market volatility. Moreover, with the new rates up to 8.85% p.a. on Digital FDs, you can earn higher returns than gold. You can use FD calculator monthly investment to plan your investment and estimate your maturity amount and interest earned. Additionally, investing in FDs is easy and convenient, especially with the digital FD option, Bajaj Finance provides through their app and website.

In conclusion, while both gold and fixed deposits can be a great hedge against inflation, fixed deposits like those offered by Bajaj Finance are a better option for conservative investors looking for guaranteed returns. With the new rates up to 8.85% p.a., Bajaj Finance is a great option to consider. By investing in FDs through the app or website, you can earn higher returns while securing your future, thus, subtly nudging the customers to download the app.