How to invest in Gold? Gold has traditionally been a favorite investment vehicle for Indians and not knowing the various channels available, and the one that is best suited for them costs people dearly. In this article, we will explore various investment options for gold and find the one that is best suited for you.

How to invest in gold in India?

There are various methods for investing in Gold in India. However, many people, at least retail investors still prefer the age-old method of buying jewellery either from their trusted jeweller or from big names like Tanishq. This becomes their undoing as they incur huge costs that could have been saved if their purpose was to invest in Gold.

So let’s explore the various options to invest in gold in India

Buy ornaments from jewellery shops

As mentioned above, this is by far the most used method to buy gold in India. Housewives reason that gold jewellery provides them the comfort of security since that is controlled by them unlike money or other financial instruments. To be fair, this actually does come to some people’s rescue in trying times when other options are closed.

However, this method attracts a hefty making charge. Generally starting from about 5%, this can go as high as 40% or even more in highly designed jewellery. Losing around 20% at the start of investment is like a gut-shot and would probably take years of growth to recover. Hence this method is not advised just for investment’s sake.

Another problem is that you don’t know the purity of the item you buy. In most cases where the buyer is uninformed, either the purity is questionable or the rates are high for the purity mentioned. For example, the shop might charge a 24-carat rate for 18-carat purity. These issues come to light at the time of selling which happens after decades if at all, at which time the investor faces loss.

On the other hand, if increasing the social and not the financial capital the primary purpose then by all means deck yourselves with beautiful designer sets. The alternative (diamonds) are even worse for your portfolio – won’t comment anything about the look though.

Gold Saving Schemes from Jewellers

Another form of investment that is popular in tier 2 and tier 3 cities is of saving some money with a jeweller on a monthly basis (or some other periodical fashion). At the end of the saving period, the investor can buy jewellery from the jeweller. The jeweller may also add some bonus amount depending on the scheme or the item you buy.

There are some apparent risks associated with this – the first and foremost is the credit risk of the jeweller. There have been instances where the jewellers shut shop and people have lost their hard-earned money.

Secondly, if there is no bonus amount, interest is lost that the money could have earned in a better investment instrument. If there is a bonus amount, then also there is an issue that the making charge might be high which might cover bonuses, profits and more!

Thirdly, since the exit might be through taking jewellery from that jeweller there is obvious liquidity risk which might be a big issue with the kind of families that do invest in these schemes.

Overall, I believe that it is better to stay away from such schemes.

Recommended Read: Investment: What Is Important – Risk Or Return? What Else?

Buy coins and bars

If having physical possession an absolute necessity, buying coins and bars is a much better investment option than buying jewellery. This is because, while the making charges are present in this also, they are negligible as compared to the charges in ornaments, especially if the quantity is large.

Secondly, since there are comparatively very lesser making charges, coins and bars can be bought from big brands. This reduces the chances of the issue of purity or cheating in any other way. These can also be purchased from banks which would further reduce these issues.

One issue in both these forms however is the handling cost. You might have to take some sort of security measures to safeguard your belongings against theft. This would reduce the return you get.

Gold ETFs

ETF is the short form for exchange-traded funds. These are open-ended funds and you can buy and sell them on the stock market. The fund managers for this track gold prices and invest in 99.5% purity gold for a major percentage of the fund value, and the balance is invested in debt. Hence, investment in these funds means taking a position on gold.

Investing in gold ETFs requires a Demat account that may be chargeable, basis the platform, and also has some expense ratio (annual maintenance charge) which might be 0.5% to 1%. There are some funds that may have even lower expense ratios. Also, there might be some commissions on buying and selling basis the broker you use.

There are some startups like Upstox that offer free Demat and trading accounts plus some other benefits which users can avail of by registering till these companies are on a growth path.

Hence, if you want to invest thinking that prices might increase in the future and don’t bother about the physical possession, this might be one of the ways. The minimum investment is for 1gm of gold.

Gold Funds

These are essentially mutual funds that invest in Gold ETFs and other related assets. This does not require a Demat account but the charges are higher compared to ETFs. This is because the charge for ETF in which these funds invest is there and then there is an additional charge for the mutual fund itself.

These are also less liquid since unlike ETFs these are not traded on the exchange and also carry an exit load which may be for withdrawal under a year. The minimum investment amount is generally Rs1000.

From an investment point of view, if you know what you are doing and already hold a Demat account, I believe that ETFs would be better than mutual funds.

Digital Gold

Nowadays startups have started offering digital gold in which you can invest at market prices in digital gold from Re 1. These startups have an association with either gold manufacturers or traders. There is an option to take back value or physical delivery. Physical delivery might have a constraint of minimum weight and would attract making and delivery charges.

Sovereign Gold Bonds

The government of India has come up with the Sovereign Gold Bond Scheme in which an investor can buy gold bonds of 8 years of maturity. These can be exited in the 5th, 6th, or 7th year also. Some important aspects of the scheme are:

  • You can get some discount by choosing the online option of investing
  • You get a 2.5% annual interest – paid semiannually – TDS at source is not deducted
  • Returns are tax-free if held to maturity
  • These are traded in the market – however, might trade at discount because of lower liquidity
  • Individuals can buy from 1gm to 4kg annually

Tip: Investors can compare the fresh issue and those being traded in the market and choose the one that gives the best ROI.

Final Words

Having gold jewellery is probably the first thing that you would buy because it would serve a dual purpose. However, just for investment purpose jewellery is a very bad option because of the loss in making charges and other issues discussed above. Saving schemes with jewellers is best to be avoided.

In a world going digital, physical possession should be best avoided because of the carrying costs and making charges. For long term investment, I believe that the government sovereign gold bond scheme is particularly good as it has tax benefits and a 2.5% income. However, for the short term, Gold ETFs may be a good option.

Categories: Investment

Ravi Maheshwari

Ravi is an IIM ranker with over 9 years of work experience and has helped optimize the financial performance of companies like BPCL, Sun, Ola, Swiggy, and Curefit. In this blog, he explains how to improve personal finance and also gives insights into financial models of companies.


Stacy Stilwell · April 19, 2021 at 09:48

Wow, this post is fastidious, my younger sister is analyzing such
things, so I am going to convey her.

Adam Chu · April 19, 2021 at 11:04

Hi, I do believe this is an excellent site. I stumbledupon it 😉 I may return once again since i have bookmarked
it. Money and freedom is the greatest way to change, may you be rich and continue
to help others.

James Patton · April 19, 2021 at 13:10

I love what you guys tend to be up too. This type of clever work and coverage!
Keep up the amazing works guys I’ve included you guys to my own blogroll.

Alberta Colbert · April 19, 2021 at 16:44

It is perfect time to make some plans for the future and
it’s time to be happy. I’ve learn this put up and if I may just I wish
to recommend you some interesting things or tips.
Perhaps you can write subsequent articles relating to this article.

I wish to learn even more things about it!

James Varga · April 19, 2021 at 19:40

This is a topic that is near to my heart… Cheers!
Exactly where are your contact details though?

Angela Bebout · April 19, 2021 at 22:59

I’ve been browsing online more than 4 hours today, yet
I never found any interesting article like yours. It is pretty worth enough for me.
Personally, if all web owners and bloggers made good content as you did, the net will be a lot more
useful than ever before.

Nova Wicker · April 20, 2021 at 01:20

I will immediately take hold of your rss feed as I can’t in finding your e-mail subscription hyperlink or
e-newsletter service. Do you’ve any? Please permit me know so that I may subscribe.

lebron 16 · April 20, 2021 at 01:48

I and also my buddies were actually following the great thoughts from your web blog and so at once came up with a terrible suspicion I never expressed respect to the web site owner for those secrets. Those women happened to be consequently excited to study all of them and already have pretty much been loving those things. I appreciate you for indeed being simply helpful as well as for picking out such superior themes millions of individuals are really needing to understand about. My very own honest apologies for not expressing appreciation to you sooner.

stephen curry shoes · April 20, 2021 at 01:49

Thanks so much for giving everyone an extremely nice chance to discover important secrets from this web site. It is usually so amazing plus packed with fun for me and my office friends to visit the blog no less than 3 times a week to study the newest secrets you have got. And lastly, I’m so certainly fascinated with your special tips and hints you give. Some 3 points on this page are completely the most beneficial we have ever had.

yeezy 500 · April 20, 2021 at 01:49

Thank you a lot for giving everyone remarkably marvellous chance to check tips from this website. It’s always so pleasurable and as well , full of a good time for me and my office co-workers to visit your site on the least thrice every week to read the latest guidance you have. Of course, we are usually happy with your dazzling secrets served by you. Selected 4 facts on this page are definitely the most efficient I’ve had.

Pay Day Loans · April 20, 2021 at 02:36

[url=]all payday lenders[/url]

SueUnita · April 20, 2021 at 12:06

[url=]cialis 10 mg[/url] [url=]cialis 5mg price australia[/url] [url=]buy metformin 1000 mg uk[/url] [url=]suhagra 50 mg price[/url] [url=]sildenafil 20 mg cost[/url] [url=]cialis online paypal[/url] [url=]uk viagra[/url] [url=]cheap cialis generic[/url] [url=]viagra 10 mg tablet[/url] [url=]internet pharmacy manitoba[/url]

golden goose · April 20, 2021 at 18:32

you’ve gotten an important blog here! would you prefer to make some invite posts on my weblog?

chrome hearts online store · April 20, 2021 at 18:38

I’m typically to running a blog and i really recognize your content. The article has actually peaks my interest. I am going to bookmark your site and keep checking for brand spanking new information.

NickUnita · April 20, 2021 at 19:32

[url=]generic viagra in canada[/url] [url=]cialis online drugstore[/url] [url=]how much is a viagra prescription[/url] [url=]escrow pharmacy online[/url] [url=]price of viagra in mexico[/url] [url=]cialis discount pharmacy[/url] [url=]viagra india[/url]

curry 5 · April 20, 2021 at 20:10

My spouse and i felt absolutely ecstatic when Raymond managed to complete his reports by way of the ideas he made from your blog. It is now and again perplexing just to be giving away methods which people today might have been trying to sell. We really know we need you to appreciate for this. Most of the explanations you’ve made, the easy blog menu, the friendships you can help engender – it’s got all sensational, and it’s making our son in addition to our family feel that that issue is amusing, and that’s extraordinarily fundamental. Thank you for all!

kd 10 · April 20, 2021 at 20:11

I precisely wanted to say thanks once more. I am not sure what I would have followed in the absence of the actual creative concepts revealed by you regarding my problem. It was actually a real horrifying concern in my position, however , being able to see this skilled technique you dealt with it took me to cry for contentment. I am thankful for this service and in addition hope that you realize what an amazing job that you’re accomplishing instructing many others via your site. I am certain you haven’t come across any of us.

yeezy boost · April 20, 2021 at 20:11

I am only writing to make you know what a superb discovery my friend’s princess enjoyed checking your blog. She figured out so many issues, including what it is like to have an awesome helping heart to let folks just thoroughly grasp certain hard to do topics. You actually exceeded our own desires. Thanks for offering those informative, safe, explanatory not to mention easy tips about that topic to Emily.

100% real jordans for cheap · April 21, 2021 at 12:13

This is the correct weblog for anybody who needs to find out about this topic. You realize so much its nearly laborious to argue with you (not that I really would need匟aHa). You undoubtedly put a brand new spin on a subject thats been written about for years. Nice stuff, simply great!

air jordan · April 21, 2021 at 12:14

There’s noticeably a bundle to learn about this. I assume you made certain nice factors in features also.

yeezy shoes · April 21, 2021 at 14:33

I’m just writing to make you understand of the perfect discovery my cousin’s daughter encountered visiting your site. She picked up a wide variety of things, with the inclusion of what it’s like to possess an awesome teaching heart to let men and women with no trouble master certain tricky topics. You undoubtedly surpassed her expected results. Many thanks for presenting the productive, healthy, informative and in addition cool guidance on that topic to Mary.

yeezy 380 · April 21, 2021 at 14:33

I want to point out my admiration for your kind-heartedness for people that actually need help on this important area. Your very own commitment to passing the solution all-around appears to be astonishingly functional and have continually permitted girls just like me to get to their ambitions. Your personal warm and friendly advice signifies so much a person like me and still more to my mates. Thanks a lot; from all of us.

curry 7 shoes · April 21, 2021 at 14:33

Thanks a lot for providing individuals with an extremely spectacular chance to discover important secrets from this website. It is always very good and as well , jam-packed with a lot of fun for me personally and my office fellow workers to visit your web site at a minimum 3 times in 7 days to read the newest things you have got. And definitely, I am just at all times astounded considering the cool information you serve. Certain 3 facts in this posting are particularly the most efficient we have had.

Michael Ulman · April 21, 2021 at 22:39

Its like you read my thoughts! You appear to know so much about this, such as you wrote the guide in it or something. I believe that you could do with a few percent to pressure the message house a bit, however instead of that, this is magnificent blog. A fantastic read. I will certainly be back.

John Schroer · April 22, 2021 at 00:42

I’ve been surfing online more than 3 hours today, yet I never found any interesting article like yours.
It’s pretty worth enough for me. In my opinion, if all webmasters
and bloggers made good content as you did, the web will be much more useful than ever before.

James Hughes · April 22, 2021 at 04:30

Wow, this piece of writing is pleasant, my younger sister is analyzing these kinds
of things, therefore I am going to let know her.

off white · April 22, 2021 at 05:52

Nice post. I learn something more difficult on different blogs everyday. It is going to always be stimulating to learn content material from other writers and practice a little one thing from their store. I抎 prefer to use some with the content on my weblog whether you don抰 mind. Natually I抣l offer you a hyperlink on your net blog. Thanks for sharing.

kyrie irving shoes · April 22, 2021 at 05:53

I discovered your weblog web site on google and verify a number of of your early posts. Proceed to maintain up the very good operate. I simply further up your RSS feed to my MSN Information Reader. Looking for forward to studying extra from you in a while!?

kyrie 6 · April 22, 2021 at 05:58

Youre so cool! I dont suppose Ive read anything like this before. So good to seek out any individual with some authentic thoughts on this subject. realy thank you for beginning this up. this website is one thing that’s needed on the net, somebody with just a little originality. helpful job for bringing one thing new to the internet!

supreme clothing · April 22, 2021 at 09:13

I want to show my passion for your kind-heartedness for all those that really need help on this one topic. Your very own commitment to passing the message all around appears to be exceptionally useful and have without exception made workers just like me to attain their goals. Your personal useful suggestions implies much to me and especially to my office workers. Best wishes; from each one of us.

off white · April 22, 2021 at 09:13

I wanted to make a simple message to be able to appreciate you for some of the amazing facts you are showing on this site. My particularly long internet look up has at the end been honored with useful know-how to exchange with my contacts. I would assume that many of us site visitors actually are extremely endowed to exist in a fabulous website with many wonderful professionals with useful ideas. I feel quite privileged to have seen your entire website and look forward to plenty of more pleasurable minutes reading here. Thank you once again for everything.

jordans shoes · April 22, 2021 at 09:14

I simply had to say thanks all over again. I am not sure what I might have achieved without the recommendations revealed by you concerning this situation. It has been the hard situation in my position, nevertheless finding out this skilled technique you handled it forced me to leap for fulfillment. I am just thankful for your work and thus wish you really know what a powerful job you have been putting in training people by way of your webpage. I am sure you’ve never got to know all of us.

NickUnita · April 22, 2021 at 15:04

[url=]tadalafil for sale[/url] [url=]viagra tablet online[/url]

William Stocking · April 22, 2021 at 15:06

I’ve been browsing online more than 3 hours today, yet I never found any interesting
article like yours. It’s pretty worth enough for me.
Personally, if all website owners and bloggers made good content
as you did, the web will be much more useful than ever before.

Sandra Ortiz · April 22, 2021 at 17:47

I have been browsing online more than 2 hours today, yet I never found any interesting article like yours.

It is pretty worth enough for me. In my opinion, if all site owners and bloggers
made good content as you did, the web will be a lot more
useful than ever before.

Harold Benz · April 22, 2021 at 23:37

Hey just wanted to give you a quick heads up. The words in your content seem to be
running off the screen in Firefox. I’m not sure if this is a format issue or something to do with internet browser compatibility but I
thought I’d post to let you know. The design and style look great though!
Hope you get the issue solved soon. Cheers

buying cialis cheap usnyc · April 19, 2021 at 08:30

buying cialis cheap usnyc

buying cialis cheap usnyc

mom son viagra australia · April 19, 2021 at 14:24

mom son viagra australia

mom son viagra australia

cialis 20mg price in mexico · April 19, 2021 at 18:37

cialis 20mg price in mexico

cialis 20mg price in mexico

comprar viagra online mexico · April 20, 2021 at 01:08

comprar viagra online mexico

comprar viagra online mexico

sildenafil 100 mg online · April 20, 2021 at 02:10

sildenafil 100 mg online

sildenafil 100 mg online

cialis purchase online · April 20, 2021 at 06:39

cialis purchase online

cialis purchase online

viagra order tablet low cost · April 20, 2021 at 16:36

viagra order tablet low cost

viagra order tablet low cost

whitney wright viagra · April 20, 2021 at 22:27

whitney wright viagra

whitney wright viagra

sildenafil 50 mg mexico · April 21, 2021 at 20:56

sildenafil 50 mg mexico

sildenafil 50 mg mexico

marley drug viagra australia · April 21, 2021 at 23:53

marley drug viagra australia

marley drug viagra australia

tablet ordering viagra low cost · April 22, 2021 at 04:32

tablet ordering viagra low cost

tablet ordering viagra low cost

comprar sildenafil · April 22, 2021 at 11:55

comprar sildenafil

comprar sildenafil

sildenafil 100 mg tablet cost · April 22, 2021 at 17:51

sildenafil 100 mg tablet cost

sildenafil 100 mg tablet cost

cialis pills for sale uk · April 22, 2021 at 22:13

cialis pills for sale uk

cialis pills for sale uk

Leave a Reply

Your email address will not be published. Required fields are marked *