Summary 

If you’re a risk-averse investor looking for consistent profits, gold is the way to go. Gold is a one-of-a-kind asset: it’s both a symbol of luxury and an investment, and it’s extremely liquid while also being scarce. Because gold has no counterparty risk, it may be a valuable addition to any investment portfolio. The price of gold rises in reaction to circumstances that lower the value of other investments.

If you’re new to investing in gold, keep reading.

How to Invest in Gold in the Best Possible Way

Gold is one of the most popular precious metals in the country. It is more than just an asset for Indians – most people have historically purchased it in such forms as jewellery, coins or bullions.

Gold is still a popular investment instrument due to its high availability and inflation-beating returns. Furthermore, when the price of this precious metal decreases, it does not remain in the shadow for long and frequently makes a significant recovery.

Why should you invest in gold?

Gold provides investment security and liquidity and the potential for relatively high returns. You may seek high liquidity, safety, and profits, if you are a risk-averse investor. Here are two compelling reasons to invest in gold.

  1. Gold investment returns outperform inflation over time, and long-term gold investment returns align with inflationary increases.
  2. Gold and equity market performance are inversely associated. Thus, if stock prices fall, the gold value will likely rise, which may help balance the overall success of your investment portfolio.

What are the top 5 ways to invest in gold?

Earlier, gold used to be traditionally kept in physical form, but various forms, such as gold exchange-traded funds (ETFs), sovereign bond schemes, and gold mutual funds, have emerged over time.

You can also invest in gold on the internet, another investing scheme. Let’s take a closer look at each of these alternatives.

Invest in gold in the digital space

You may buy digital gold on the websites of several financial technology (fintech) companies. You may deposit as little as INR 1 on these sites, mostly affiliated with dealers and manufacturers.

You may trade at current prices in the live market and withdraw your funds whenever you choose.

You have the choice of disinvesting at its current value or receiving actual delivery; however, specific platforms may not provide the latter, so double-check before investing. All your digital gold assets are also backed by real gold.

Gold jewellery

Another way to invest in this precious metal is to purchase jewellery from jewellers. However, it is an expensive method due to the manufacturing expenses.

Making charges are not refundable when you wish to sell your investment, which lowers your real profits dependent on gold prices at the time.

The manufacturing costs might range from 5% to 23%, depending on the jewellery style and the jeweller you pick.

Coins and gold bars

Purchasing gold in bars or coins have no utility value and is subject to costs. However, these costs are less than the manufacturing costs placed on jewellery.

Furthermore, tangible investments, such as jewellery, bars or coins, have risks of being damaged or stolen.

Gold-savings plans

Jewellers provide these gold plans in which you deposit a set sum at regular periods (generally, monthly).

You can acquire jewellery worth the amount you invested in after the investment period. Some jewellers may add a bonus to your investment, allowing you to purchase more expensive jewellery.

You must do a comprehensive background check on the jeweller before investing in such gold investment programmes for security.

Additionally, manufacturing costs may apply when purchasing jewellery, which might reduce your actual returns by eroding the incentive offered by the jeweller.

Let’s understand the distinctions between various gold investment options:

GoldGold ETFsGold Mutual Funds
There are no documentation requirements.To invest in ETFs, you’ll need documentation.While investing in gold funds, you are supposed to complete some documentation.
It is not necessary to have a Dematerialization (Demat) account.A Demat account is required to invest in Gold ETFs.It is not vital to own a Demat account to invest.
Gold prices fluctuate in lockstep with the market conditions.The price of the ETF directly influences the price of gold.Changes in gold prices have no impact on the fund’s value.
There will be no further costs.May charge fees for brokerage and asset management.You are likely to have to pay a minimum fund management fee.

What are sovereign gold bonds, and how do they work?

RBI issues sovereign gold bonds on behalf of the Indian government. Sovereign gold bonds have a set rate of return, which is currently 2.5 per cent each year.

The base unit is one gram, and these bonds are denominated in grams. One can invest a maximum of four kilos in these bonds.

Sovereign bonds have an eight-year maturity period. But one can redeem their investment as early as the fifth year. If you don’t want to own gold in its solid form, these bonds are one of the most incredible options.

Documents needed for gold investment

A copy of your updated PAN card is required if you intend to invest more than INR 2 lakhs in real gold. To invest in ETFs, you’ll need to create a brokerage account as well as a Demat account to keep your assets.

If you’re purchasing gold online using sovereign gold bonds, you’ll need Know Your Customer (KYC) papers like an Aadhaar card, a PAN card, a voter ID or a passport.

How to start your first gold investment

You can start your gold investment journey online on a trusted platform, such as ShePays. It is a digital-first Neo Bank for Women. From offering myriad products and services to creating a simple yet effective financial transaction platform, ShePays has it all. However, reading all the policy terms and conditions would be wise before investing. So, what are you waiting for? It’s time to invest in the best gold investment options available.

Most Commonly Asked Questions (FAQs)

  • Can we invest in gold via the mutual fund route?

You can invest in gold ETFs or gold funds directly with any mutual fund institution offline or online. One can invest in gold mutual funds through a certified distributor as well. Furthermore, you may use systematic investing strategies to invest in gold funds (SIPs). When you pick an SIP, you can invest as little as INR 500 in your preferred schemes at regular intervals. One can also use online portals to invest in gold mutual funds.

  • Why should you think about buying gold online? 

Gold is a liquid and stable investment alternative, particularly during market turbulence, and it often outperforms inflation. Although there is no passive income from this precious metal, such as dividends or interest, the returns can be relatively constant over time. Gold purchases made through ETFs or gold funds on the internet are a simple method to invest in precious metal without actually possessing it.

  • What is the most acceptable gold investment strategy? 

Traditionally, you could purchase gold in the form of jewellery, coins or bars. You may now invest in Gold ETFs, gold funds, sovereign gold bonds, and digital gold, among other possibilities. These are great ways to invest in this metal, but they serve different objectives. It is suggested that you weigh the numerous possibilities and select those that best suit your needs. These are great ways to invest in this metal, but they serve different objectives. It is suggested that you weigh the numerous possibilities and select those that best suit your needs.

  • Which is a better investment option: gold investment or mutual funds? Diversification is one of the most basic investment strategies for lowering your portfolio’s overall risk. If you’re considering investing in gold or mutual funds, there are a few things to think about.
FactorGold Mutual Funds
ReturnsThere will be no dividend income, only capital gains.It has the potential to generate substantial profits.
ManagementYou are in charge of your investments.Seasoned specialists manage a fund’s assets.
The excess that can be investedYou may require a considerable sum to make a significant investment based on the current gold prices.You may even invest as little as INR 500 to get started.

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