6 Ways To Invest In Gold

The festive season is here, bringing with it a huge demand for the yellow metal- GOLD. Gold is an asset class that is considered to be a hedge against fluctuating market conditions and inflation. It may not be a builder of wealth, but it definitely has the ability to maintain its value over a long period of time. Hence, along with investments in equities, it is always advised to have a small allocation to gold in your portfolio.

With the evolution of technology, buying gold has become an easy process. Investing in gold can now be done in physical or digital forms. In this article, we will tell you how to invest in gold in various ways.

#1 Jewellery

For Indians, purchasing gold jewellery is one of the most popular investment options. Though gold is a great investment asset, purchasing gold jewellery comes with additional costs. The making charges at the time of purchase add up to the cost of the piece of gold jewellery significantly, hence making it an expensive investment.

#2 Gold Bars/Coins

Another way to invest in the yellow metal is in the form of gold coins, bars or biscuits. The making charges for these forms of solid gold are very nominal and also fetch better resale value as compared to gold jewellery.

#3 Gold Saving Schemes

Gold savings schemes work like a SIP. Here, you can deposit a certain amount of money with a jeweller every month for a fixed tenure. This tenure could be 11 months, 2 years, or even more. Once the gold savings scheme matures, you can purchase physical gold from the jeweller equivalent to the invested amount.

The possession of physical gold comes with the risks of theft and storage. Hence, you can also consider investing in digital forms of gold to avoid these risks.

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#4 Digital Gold

This is one of the easiest ways to invest in pure gold in a digital form. When you buy units of digital gold, the seller will store physical gold of the equivalent quantity in a secured vault. You can buy and sell digital gold online, and also redeem your invested value in the form of physical gold if required.

#5 Sovereign Gold Bonds

SGBs, or Sovereign gold bonds, are bonds issued by the Reserve Bank of India in tranches. SGBs are offered in terms of weight at the prevailing rate of gold along with a fixed rate of interest. They come with a lock-in period of 5 years and a maturity period of 8 years. At maturity, you will receive the amount equivalent to the value of gold at the prevailing market rate. You can invest in SGBs through post offices, banks, or stock exchanges.

#6 Gold Exchange Traded Funds (ETFs)

Gold ETFs are exchange-traded mutual funds that invest in physical gold, SGBs, and gold stocks. These exchange-traded funds are listed and traded on the Bombay Stock Exchange Ltd. (BSE) and the National Stock Exchange of India (NSE). Investing in gold ETFs is a great way to invest in gold as it does not attract any of the taxes that are otherwise levied on the purchase of physical gold, and also offers easy liquidity as it is actively traded on the stock exchanges.

Now that you know the various ways to invest in gold, you can choose which mode of investment works best for you. However, you must note that each mode of gold investment has a different tax implication during sale and redemption. Hence, it is advised to consult your financial advisor before making any decision of investing in gold.