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How Can You Play It Safe With Digital Gold Investments?

Team Jar
December 30, 2022
How Can You Play It Safe With Digital Gold Investments?

Here’s how millennials are reducing their portfolio risk by investing in digital gold. But why digital gold instead of physical gold? Find out here.

Gold has been a preferred choice of investment for millennials. The inherent value of gold makes it one of the most secure forms of investment. Today, we don’t need to visit a jeweller to invest in gold. It’s all on our fingertips now. Investors are parting ways from physical gold and investing in digital gold now.

Let’s understand digital gold investments in detail and how investors are playing it safe with digital gold.

Digital Gold – The New Era of Gold Investing

Digital gold is nothing but a gold investment in virtual form. Let’s consider the following case:

Suppose I am thinking of buying gold. But I don’t have a personal jeweller of whom I have been a regular customer. Therefore, I visit a jewelry shop near my home and ask for 10 grams of gold. He charges Rs. 54,300 for 10 grams. I take the gold and get back to my home. However, when I check the gold price, it is Rs. 49,500.

Anguished, I revisit the jeweler to inquire about the same. He says that this is due to making charges and all that. While gold commodities usually involve certain making charges, I have not been aware that it would be this high. Further, I am also concerned about the purity of the gold I purchased.

The next day, I read in the newspaper about the burglary in a nearby house. As I was worried about the gold I purchased, I decided to keep it in a bank locker. I went to my bank and inquired about the locker charges.

For small lockers, they quoted Rs. 3000 annually, whereas, for medium lockers, the rent was Rs. 6500 annually. I went for the smaller one and decided not to invest much in gold.

That’s the reason why people are parting ways from physical gold investment to invest in digital gold.

How Do Digital Gold Investments Work?

Before jumping to how we can play it safe with digital gold investments, let’s understand how digital gold investments work. We can invest in digital gold through various online platforms. In India, the following are the primary digital gold providers:

  • MMTC-PAMP India – It is a joint venture of the Metals and Minerals Trading Corporation of India (MMTC) and MKS PAMP. While the Indian Government owns MMTC, MKS PAMP is a Swiss company.
  • Augmont Goldtech
  • Digital Gold India, through its SafeGold brand

These providers allow investors to invest in digital gold directly or through tie-ups with various third-party investing platforms. Therefore, when we invest in digital gold through any of the platforms, we buy digital gold from any of the above three providers.

These providers purchase an equivalent amount of gold and store it in insured and secured vaults. The investment is made in 24-karat pure gold. Thus, the money we invest in digital gold is actually gold without the hassle.

Features of Digital Gold

Digital gold offers various features, making it a lucrative investment option for us. These include the following:

  • While we can buy and sell digital gold anytime, anywhere, in just a few clicks, we should go through the terms for selling the gold. Some providers may allow the selling only when the selling window is open. Different providers may have different terms when it comes to selling digital gold. But in most cases, digital gold investments are highly liquid.
  • While the gold is stored in secured and insured vaults, we don’t have to pay any insurance or locker charges.
  • No need to visit any jeweller to buy or sell gold. We can do everything at our convenience by just sitting at home.
  • We don’t need to worry about the purity of the gold, as we saw in the above example. We need to decide when to enter and exit regarding digital gold investments. The investments are made in 24-karat gold.
  • As gold is one of the safest investment alternatives, digital gold is a great way to reduce the overall portfolio risk of investors.

Things to Keep in Mind While Investing in Digital Gold

We should be aware of our purpose of investment. Digital gold investments are best suited only when we are purchasing them solely for investment. Once we decide to withdraw our investments, we are given two options: to sell the gold and withdraw money or to get the actual gold delivered to us.

The former is simple: we get back our money equivalent to the prevailing gold prices.

However, opting for the latter will attract delivery charges for delivering the gold to our doorsteps. Further, the gold can either be delivered in the form of coins, biscuits, or jewelry. In any case, it will involve making charges.

Thus, getting gold delivered to our doorsteps is ideally unsuitable as it reduces our returns. However, we can still go for the same if we want physical gold for any of the purposes.

How to Invest in Digital Gold?

Digital gold is a safe and secure investment option. However, it is not regulated by any regulator, unlike SEBI in the case of the security market and RBI in the case of banks. However, investments in digital gold are still one of the safest bets to go ahead with.

We should go for trusted sources and read the terms and conditions carefully before investing – the precaution we always take before investing in any instrument.

Jar is an ideal and trusted investment platform that allows us to invest in digital gold. It is a daily investment app that helps us adopt a disciplined investment approach. We can automate investment in digital gold and start investing with as low as Rs. 10.

Further, we can gift digital gold to our near and dear ones using Jar. Have you started investing in digital gold? If not, then it’s time to bring a change to your investments with Jar!