Best Ways to Invest in Gold in India for 2024

Introduction

Gold has been a valuable and highly sought-after precious metal for coinage, jewelry, and other arts since long before the beginning of recorded history. Today, it continues to hold sway as a viable investment option. Here’s a comprehensive guide on the various ways you can invest in gold.

Ways to Invest in Gold

1-Physical Form

Investing in gold in its physical form is the most traditional method. This can be in the form of jewelry, coins, or bars. However, this method comes with its own set of challenges such as the risk of theft, issues with purity, and loss during manufacturing.

2-Digital Form

Digital gold has emerged as a popular investment option in recent years. There are several platforms like Digigold, Groww, Zerodha, Tanishq, 5 paisa, Gpay, Paytm, etc., where you can invest in digital gold. The benefits include no making charges and no fear of theft.

3-Gold ETFs

Gold Exchange Traded Funds (ETFs) can be purchased on exchanges like NSE or BSE. Examples include IDBI Gold ETF, SBI Gold ETF, Nippon India Gold ETF, etc. They also come with no making charges and no fear of theft.

4-Gold Mutual Funds

You can invest in Gold Mutual Funds in the same way you invest in other Mutual funds. Examples include SBI Gold Fund, Axis Gold Fund, etc. These too have no making charges and no fear of theft.

5-Sovereign Gold Bonds

Sovereign Gold Bonds (SGBs) are issued by the Reserve Bank of India (RBI). You can invest in SGBs by visiting any bank like SBI, HDFC Bank, etc. They come with no making charges, no fear of theft, and no GST.

 

Quick Comparison

Here’s a quick comparison of the different ways to invest in gold:

Basis	Physical	Digital	Gold ETF	Gold Mutual Fund	Sovereign Gold Bond
Total Charges	10%-20% (Making, GST, insurance)	Up to 6% (GST+ Spread)	0.5%-1% Expense Ratio	0.6% to 1.2% expense ratio	No visible Expense
Lock in period	-	-	-	-	5 Years
Maturity	-	-	-	-	8 Years+3 Extendable
Risks	Theft, Purity Issue, loss during manufacturing	Lack of regulatory oversight	Market risk related to the volatility of gold prices	Market risk related to the volatility of gold prices	Risk of capital loss if price of Gold declines on maturity
Benefits	Its value is not affected by rules and regulations by government.	No making charge, No fear of theft.	No making charge, No fear of theft.	No making charge, No fear of theft.	No making charge, No fear of theft, no GST.

 

 

Tax Comparison

Here’s a comparison of the tax implications for the different ways to invest in gold:

Basis	Holding period	Physical Gold	Digital Gold	Gold Fund	SGB
STCG	Less than 3 years	As per tax slabs	As per tax slabs	As per tax slabs	Can’t Sell before 5 years
LTCG	More than 3 years	20% post indexation	20% post indexation	20% + 4% cess	Can’t Sell before 5 years

 

 

Returns Comparison

Here’s a comparison of the returns for the different ways to invest in gold:

Basis	Physical	Digital	Gold Fund	SGB
Investment Amount	10,000	10,000	10,000	10,000
Charges	10-20%	3% GST	0.5-1.2%	No Charge
Actual Investment	8,500	9,700	9,900	10,000
Interest	-	-	-	2.5% per annum
CAGR Last 5 years	12.3%	12.3%	16%	12.3%
Tenure	5	5	5	5
Corpus	₹15,182	₹17,325	₹20,793	₹17,861
Interest	-	-	-	₹1250
Total	₹15,182	₹17,325	₹20,793	₹19,111
Tax+ Spread	₹ 570	₹1498	₹2590	-
Post Tax	₹14612	₹15827	₹18203	₹19,111

Investing in gold can be a great way to diversify your investment portfolio. However, it’s important to understand the different ways to invest in gold and their respective benefits and drawbacks. Always do your research and consider your financial goals before making an investment decision.