We all can agree that Gold jewellery is not just a fashion accessory, but also a tool to help us get through financial difficulties.
As a result, Gold has the longest record in terms of investment and trade, and purchasing gold has long been regarded as a financial safety net.
There are two types of gold ownership: Paper and Physical. Physical gold can be purchased in the form of jewellery, coins, and gold bars, while paper gold can be purchased in the form of gold Exchange-Traded Funds (ETFs) and Sovereign Gold Bonds (SGBs). There are also Gold Mutual Funds and Digital Gold.
Check out our article on "everything you want to know about Digital Gold- Benefits, Risks & Taxation with Infographics".
Here's your Kickstarter guide to all type of Gold Investments:
Gold is extremely valuable. But wearing it as jewellery raises issues about safety, expensive costs, and out-of-date designs.
Then adds up making and delivery charges which may be pricey. The manufacturing costs on gold jewellery, which normally vary between 7% and 12% of the cost of gold (and can reach as high as 25% in unique designs), are also non-refundable.
Of course, we shouldn't ignore the safety risks involved with it.
2. Gold Coins
Jewellers, banks, non-banking financial companies, and now even e-commerce websites sell gold coins.
The government has introduced coins with the National Emblem of Ashok Chakra on one side and Mahatma Gandhi on the other.
The coins will be available in 5 and 10 grams denominations, while the bars will be available in 20 grams.
The Indian gold coin and bar have a purity of 24 karats and a fineness of 999, as well as superior anti-counterfeiting technology and tamper-proof packaging.
All coins and bars will be hallmarked as per BIS guidelines which are distributed through authorized MMTC stores, as well as some bank branches and post offices.
Again, there are safety risks here. It might even need polishing 10 years down the line, increasing the cost.
3. Gold Exchange-Traded Funds (ETF)
The cost-effective approach to owning paper gold is through Gold Exchange-Traded funds (Gold ETF).
Gold is the underlying asset, and such investments (buying and selling) take place on a stock exchange (NSE or BSE).
Furthermore, the high initial buying and even selling costs associated with owning jewellery, bars, or coins provide the low-cost gold ETF with an advantage.
Another benefit is pricing transparency. The physical gold price is the benchmark since the price at which it is purchased is probably the closest to the actual price of gold.
All you need is a trading account with a stockbroker and a Demat account.
It is possible to purchase in one lump payment or at regular intervals through Systematic Investment Plans (SIP). You can even purchase 1 gram of gold.
Although there are no entry or exit fees, there are other costs involved here:
- Expense Ratio (for managing the fund), which is around 1% and is normally cheap when compared to other mutual funds.
- Broker fee for every time you purchase or sell gold ETF units.
- Tracking inaccuracy, which is technically not a charge but has an impact on refunds. It arises as a result of the fund's expenses and cash holdings, which do not reflect the current gold price.
4. Sovereign Gold Bonds (SGBs)
Another way to own paper gold is to purchase a Sovereign Gold Bond.
They are RBI mandated certificates issued against grams of gold, allowing you to invest in gold without worrying about protecting your physical assets.
Although they are issued by the government, they are not readily available. Instead, the government will periodically open a window for investors to purchase SGBs.
This happens every 2-3 months on average, and the window will be open for roughly a week.
SGBs have a tenor of 8 years but encashment/redemption of the same is allowed only after the fifth year after the date of issue.
Are you investing for the first time? Don't have financial knowledge? Hesitant to invest a large sum of money in one go?
Then the best option for you would be to invest in Digital Gold Daily with Small Investment Plans.
5. Digital gold
Digital Gold is one of the easiest, transparent, and safest forms of Gold investments.
It's free from exchange rate manipulations and variations and allows the investor to easily trade throughout the world without actually touching physical gold.
You can buy digital gold through multiple apps and websites; however, only 3 gold companies keep your gold, namely Augmont Gold Ltd, Digital Gold India Pvt. Ltd. - SafeGold, and MMTC-PAMP India Pvt. Ltd.
It is a safe, convenient, and cost-effective way of purchasing and investing in gold online that does not even require any additional storage and transportation costs.
You can even get it delivered to your home in physical form if you want. But you know what's the best part? You can start investing from as low as Re.1.
How can you invest daily in it? Through Jar App.
Jar is an automated investment app that lets you save and invest money into digital gold, automatically, with the spare change from your online transactions.
Isn't that cool? It's not a risky investment and won't even be heavy on your pocket.