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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.

 

 

 

 



Frequently Asked Questions

+

Gold has been cherished for centuries for its intrinsic value, making it a reliable hedge against economic uncertainty and inflation. Its enduring allure stems from its rarity, durability, and universal acceptance.

+

You can invest in gold through physical forms like jewelry, coins, or bars, digital platforms such as Digigold or Paytm, Gold ETFs traded on stock exchanges, Gold Mutual Funds, and Sovereign Gold Bonds issued by the Reserve Bank of India (RBI).

+

Physical gold provides tangible ownership, independence from market fluctuations, and is not subject to regulatory interventions. However, challenges like the risk of theft, purity issues, and loss during manufacturing should be considered.

+

Digital gold offers convenience, no making charges, and eliminates the risk of theft associated with physical forms. Platforms like Groww or Gpay provide easy access to investing in gold digitally.



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