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The festive season is considered the best time to buy gold in India. The fascination for the yellow metal has its roots in old-age tradition. The demand for gold strengthens in the year-end due to wedding season and festivals such as Navratri, Durga Pooja, Dhanteras and Diwali when buying gold is considered auspicious. People buy and invest in gold irrespective of age and income. Apart from religious and cultural significance, the yellow metal is considered to be a good investment option as it retains its value even during times of financial upheaval.

The debate over which form of gold- physical, digital, SGB or ETF- is best is unending. It totally depends on the discretion of the people and occasion. 

“Of late we have seen many debates about the form in which Gold investment is better, on the one side you cannot wear paper gold in your family functions while on another side you do not get the full benefit of price benefits in physical gold. In the near term we have seen attraction coming into sovereign gold bond as it fetches the interest rate and easy liquidity through stock exchanges, while physical gold gives you liquidity at midnight," said  Vidit Garg, Director, MyGoldKart

Experts suggest that there are certain pre-requisites that an investor should consider before making any investment decision on investing in gold. They suggest investing in gold from a longer-term perspective and from a diversification perspective and inflation hedge

Investment in gold can be done in the form of Physical gold, Sovereign Gold Bonds, Gold ETF, Gold Funds. Investors looking to save on taxes can also opt for gold funds. TDS is not applicable on these types of investments; instead, only the taxes applicable to buying and selling jewellery is levied on these funds.

"The mode of investment is clearly dependent on the need and the risk appetite of the investor. Still, to sum it up, digital way of investing in gold can be a lucrative option for those who want to divest their portfolio and remain invested into gold from a longer-term perspective," Prathamesh Mallya, AVP- Research, Non-Agri Commodities and Currencies, Angel One Ltd said.

He further added, “At last, if I were to pick investment in gold, I would consider investment in SGB’s as a better option to remain digitally invested in the asset class and earn interest on the investment, which is not available in any other mode of gold investment."

Digital gold is the new flavour of the season and buying gold digitally has multiplied with the advent of Covid- 19

"Digital gold on the other hand is a completely different way to look at gold - it allows fractional savings in gold starting as low as 1 which is not possible in any other instrument. It appeals to a much larger audience due to its ease of use and extreme flexibility in buying & selling," Nitin Misra, Co-founder, Indiagold

" While physical gold has always had its challenges with regards to its validity, storage etc, this year the need to buy gold through financial instruments digitally has multiplied with the advent of COVID 19 and social distancing. From the comfort of their home, investors can invest in gold through Sovereign Gold Bonds, Gold Mutual Funds and Gold ETFs. All these Gold linked financial products can be bought through the investors Demat account," said Yogesh Kalwani, Head - Investments, InCred Wealth

Most investment experts recommend spreading your investments across various asset classes like stocks, bonds, gold, real estate, etc. to achieve optimum diversification. While many experts believe that investors should limit around 5-10 per cent of their investment portfolio to gold investments.

“Investment in any asset class should be based on the individual investor’s risk profile, investment goals and asset allocation. We recommend between 5% to 10% allocation to Gold as a hedge against inflation and for portfolio stability as Gold has a low correlation with other asset classes," said Yogesh Kalwani.

 

 

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