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Want to invest in Gold? Here are 4 best ways

Gold rates today: On MCX, gold futures were up at  ₹50,990 (AFP)Premium
Gold rates today: On MCX, gold futures were up at 50,990 (AFP)

  • Gold has traditionally been regarded as a superior investment asset. It has become a safe haven for investors all around the world in recent years. Gold, in particular, possesses all of the characteristics that a traditional investor seeks in an asset class. Investing in gold has always shown to be a successful approach to combat inflation. Is there, however, a better way to go about it? Let's have a look.

Gold was purchased in earlier times in only one form which was physical like jewellery, gold brick or coins. But as the time advances, it is better to realise that investing in gold through jewelleries is not the only way as there are different ways to invest in gold now.

Experts always suggest investors to invest some of their portfolio in gold, as it helps to diversify the risk. The yellow metal also brings stability to a portfolio when other asset classes have taken a hit.

Let’s look at some ways through which investors can invest in gold-

Physical Form

Gold is often bought as a physical form, mainly jewellery which is not considered a valuable choice because of the making cost and value attached to the same. Buying the yellow metal as jewellery seems less of an investment and more of a sentimental value.

Other than jewellery, physical gold also consists of bars and coins. There are various gold coin schemes by NBFs, banks and jewellers. Gold coins are usually bought in the denominations of 5 or 10 grams, while bars have a denomination of 20 grams. All types of physical gold are hallmarked and are tamper proof.

Gold Exchange Traded Funds (ETFs)

Gold ETFs are basically owning a certain quantity of gold without going through the trouble of actually owning it. There is no risk of physically owning the gold, as Gold ETFs are stored in paper format.

Buying and selling of Gold ETFs can happen on the stock exchange with the help of a Demat account and the broker. You can start the investment with as minimal an amount as one gram unit. Gold ETFs can also be used as a collateral if the investor wishes to take a loan against them.

READ MORE: Understanding the difference between gold ETFs and gold mutual funds

Sovereign Gold Bonds

Sovereign Gold Bonds are issued by the Reserve Bank of India. They are issued in the multiples of 1gm and a particular investor can buy upto 4 kg. They are considered government securities as an alternative to physical gold.

The Sovereign Gold Bonds have a eight year tenure, and an investor can withdraw only in the last three years. The bonds also give 2.5 % interest on initial investment. The investors can buy and sell the bonds on stock exchanges, once the subscription is over.

Digital Gold

The Digital Gold is issued by Metals and Minerals Trading Corporation of India (MMTC) in association with Switzerland’s PAMP. Digital Gold can be easily bought through your mobile phone with the help of digital wallet platforms.

The gold bought is safe under the custody of MMTC-PAMP and can have a tenure of five years in between which the investor can demand for delivery anytime. The gold can be bought as coins and bars both. The price of the gold is affected by the international market prices.

As discussed above, there are surely many ways to invest in gold but it is true that physical gold has some risks with its safety and making it. While sovereign gold bonds come with a lot of benefits like they are safe as they are issued by the Reserve Bank of India and also provide interest on the investment.

Similarly, Gold ETFs also have their share of advantages that at the time of redemption the price the investor gets is pretty close to that of the market and also the investors so not have to worry about the adulteration.

Therefore, before choosing the type of gold you want to invest in, make sure to do your research thoroughly which could serve your purpose which is to achieve financial stability.

 

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