Which Gold Investment Option in India Is Best for You?

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Best Gold Investment Schemes
Best Gold Investment Schemes

There are different gold investment options in India, like physical gold, digital gold, gold ETFs and more. Know your options before investing in the asset

For centuries now, gold has been considered a precious metal by civilizations across the world. Even today, in modern times, gold continues to remain a symbol of wealth and a preferred investment option. It is often considered as a hedge against inflation, which is why many financial experts advise including the yellow metal in your portfolio. 

That said, there are also different kinds of investment options in India today. Prior to the widespread use of the internet and before technology took over, physical gold was often the only way to invest in the metal. You may recall your parents or grandparents investing in different gold purchase plans like the Tanishq gold scheme or the Malabar gold scheme. 

But now, the landscape of gold investments has expanded a great deal and includes several options. 

The Different Gold Investment Options in India 

Physical gold like gold jewellery or gold bullion may be the most common form of gold investments. However, investing in physical gold comes with certain disadvantages, like making charges for jewellery, storage costs and reduced value due to the presence of impurities.

Here is where other alternative ways to invest in the yellow metal are relevant. Check out the different kinds of gold investment options available in India today. 

  • Digital Gold

Digital gold, as the name indicates, is simply a digitised version of the yellow metal. It allows you to invest virtually in the asset without taking on the burden of physically storing the gold. Since digital gold is backed by 24 karat physical gold, the value of the investment is not diminished in any manner when compared with tangible gold. 

You can buy or sell digital gold online through various trusted platforms, making it a more liquid option for investing in gold. Furthermore, you can also purchase gold for sums as low as ₹1. Digital gold also offers various other advantages, as listed below.

  • Can be used as collateral for loans 
  • 100% secure since storage issues are eliminated
  • Can be exchanged for physical gold in the form of jewellery or bullion

  • Sovereign Gold Bonds (SGBs)

These are bonds issued by the Reserve Bank of India (RBI) on behalf of the government. They are substitutes for physical gold and are backed by the actual asset. The bonds are issued in denominations of 1 gram of gold and multiples thereof. The minimum investment amount is 1 gram, and the maximum limit is 4 kg for individuals. 

SGBs not only eliminate the costs of storing physical gold, but also offer a wide range of advantages, as outlined below. 

  • Assured market value for the asset at the time of maturity 
  • No issues like making charges 
  • No trouble regarding the ‘purity’ of the asset held
  • Interest at the rate of 2.50% per annum, credited semi-annually

  • Gold Exchange Traded Funds (ETFs)

Gold ETFs are units that represent physical gold proportionately, where 1 unit of an ETF is equivalent to 1 gram of gold. These ETFs are listed on the exchanges (both the NSE and the BSE), just like stocks. So, the purchase and sale of gold via ETFs is much easier than trading physical gold. 

  • Gold Mutual Funds

Gold mutual funds are precisely what they sound like. They are open-ended mutual funds that invest in the units of a Gold ETF. The key difference between a gold ETF and a gold mutual fund is that you do not need a demat account to invest in the latter. Furthermore, you can invest small sums via an SIP in a gold mutual fund. Gold ETFs do not offer this luxury, and require lump sum investments. 

Which Gold Investment Option to Choose?

Given the vast range of gold investment options available, it may become challenging to choose the right kind of gold for your portfolio. Here is a quick guide that can help. 

  • Digital Gold

Digital gold is a good option if you are tech savvy and want all the advantages of investing in physical gold, without the hassle of storage. 

  • Sovereign Gold Bonds (SGBs)

SGBs are best suited for conservative investors who also want to earn a small interest on their investments. 

  • Gold Exchange Traded Funds (ETFs)

Gold ETFs are ideal for you if you prefer the liquidity that comes with exchange-traded transactions, and if you have a lump sum available to invest.

  • Gold Mutual Funds

If you wish to invest small sums in the yellow metal periodically, gold mutual funds may be a good choice. 

 

Conclusion

If you prefer conventional ways to invest in the yellow metal, you can choose gold investment plans like the Malabar gold scheme or the Tanishq gold scheme. This way, you can buy physical gold and sell it at a later date, when the value of gold appreciates. 

However, if you prefer to keep pace with the times, the modern gold investment options outlined above may be ideal alternatives. Your portfolio could benefit from Sovereign Gold Bonds (SGBs) if you are a conservative investor. You could also choose gold mutual funds or ETFs. 

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