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.

443 Comments

moncler · May 4, 2021 at 05:48

I intended to post you this bit of observation in order to give many thanks the moment again with the superb pointers you have provided here. This has been quite incredibly open-handed with people like you giving without restraint all a lot of people might have offered for sale as an electronic book to make some money for their own end, particularly now that you might have tried it in case you considered necessary. These techniques in addition acted to provide a great way to comprehend other people have a similar dreams similar to mine to know more and more related to this issue. I think there are many more pleasurable situations in the future for many who start reading your website.

jordan shoes · May 4, 2021 at 05:49

I precisely desired to appreciate you all over again. I do not know what I would have worked on without the actual ways shared by you relating to my problem. It previously was a frightful matter for me, nevertheless seeing this professional technique you dealt with that forced me to leap for fulfillment. I’m just happier for your work and as well , believe you are aware of a great job you were putting in instructing people today all through a blog. I am certain you haven’t encountered all of us.

golden goose shoes · May 4, 2021 at 05:49

My wife and i got now ecstatic Edward managed to conclude his researching from the ideas he acquired when using the web page. It’s not at all simplistic just to always be giving freely tips and hints some others might have been trying to sell. We really figure out we have you to be grateful to because of that. The main illustrations you made, the straightforward site navigation, the relationships you help to instill – it’s got mostly unbelievable, and it’s helping our son in addition to us know that the issue is interesting, and that’s particularly serious. Thanks for the whole lot!

adidas yeezy · May 5, 2021 at 01:04

I would like to show my thanks to the writer just for bailing me out of this particular dilemma. Because of searching through the online world and meeting ideas which are not helpful, I figured my entire life was gone. Being alive minus the strategies to the problems you’ve sorted out by way of your report is a crucial case, and the kind that could have badly affected my career if I had not come across your blog post. Your good competence and kindness in maneuvering every aspect was very useful. I’m not sure what I would have done if I had not come upon such a thing like this. I can at this moment relish my future. Thanks for your time very much for this reliable and amazing guide. I won’t be reluctant to suggest your web page to any person who should get counselling on this situation.

off white shoes · May 5, 2021 at 01:05

My spouse and i felt now cheerful Jordan managed to round up his investigations through the precious recommendations he had out of your web page. It’s not at all simplistic to just be releasing key points people today might have been selling. Therefore we recognize we’ve got the blog owner to give thanks to because of that. The entire explanations you’ve made, the straightforward web site menu, the relationships you make it easier to promote – it’s got mostly terrific, and it is letting our son in addition to us know that this matter is thrilling, and that’s wonderfully mandatory. Thanks for the whole thing!

jordan 1 · May 5, 2021 at 20:56

I’m just commenting to let you be aware of what a really good experience our daughter developed checking your blog. She picked up a good number of pieces, with the inclusion of how it is like to have an amazing teaching mood to have many people without hassle know selected very confusing topics. You actually did more than people’s expectations. Thank you for imparting those important, trusted, informative and in addition fun tips on your topic to Mary.

moncler outlet · May 5, 2021 at 20:56

I simply desired to thank you very much once more. I am not sure what I would’ve accomplished without these ways discussed by you over that theme. This was a real horrifying crisis in my opinion, but finding out this expert strategy you processed it made me to jump for joy. I’m grateful for this help as well as trust you know what an amazing job you were undertaking training others with the aid of your web blog. I am certain you have never met any of us.

off white jordan 1 · May 5, 2021 at 20:57

My spouse and i were lucky that Michael managed to round up his analysis with the ideas he grabbed through the blog. It’s not at all simplistic to just find yourself offering thoughts that many some other people may have been selling. We understand we now have the writer to be grateful to because of that. All the explanations you have made, the straightforward web site menu, the friendships you will make it easier to instill – it is all amazing, and it is leading our son in addition to the family reason why that issue is exciting, and that’s especially pressing. Thank you for all!

EN iyi Leke Kremi · May 6, 2021 at 07:43

This is really interesting, You’re a very skilled
blogger. I have joined your feed and look forward to seeking
more of your wonderful post. Also, I’ve shared your website in my social networks!

Takipçi Satın AL · May 6, 2021 at 10:40

Hmm is anyone else encountering problems with the images on this blog loading?
I’m trying to determine if its a problem on my end or if it’s the blog.
Any suggestions would be greatly appreciated.

instagram Takipçi Satın AL · May 6, 2021 at 11:30

Hi, i think that i saw you visited my web site thus i came to “return the favor”.I’m attempting to find things to improve
my site!I suppose its ok to use some of your ideas!!

TAkipçi Satın AL · May 6, 2021 at 11:36

Hi, I do think this is a great web site. I stumbledupon it 😉 I’m
going to come back yet again since I bookmarked it.
Money and freedom is the best way to change, may you be
rich and continue to guide others.

İnstagram TAkipçi SAtın Al · May 6, 2021 at 12:12

It’s enormous that you are getting thoughts from this piece of writing as well as
from our dialogue made here.

Leke Kremi · May 6, 2021 at 13:39

HC Pigment-Control’ün cilt lekelerine karşı hızlı ve güçlü etkisi, Kuzey Kanada
Bozkırları’na özgü bir tarla bitkisi olan Rumeks’ten (Tyrostat™), tabiatın yeniden canlandırma mucizesi olan Yeniden Diriliş Bitkisi’ne kadar birçok
doğal ve saf aktif bileşene dayalıdır. Tüm bu
aktif bileşenlerin, lekeler ve cilt yaşlanması üzerindeki etkileri in-vivo
testler ve klinik laboratuvar çalışmalarıyla kanıtlanmıştır leke kremi için hemen sitemizi ziyaret edebilirsiniz

Leke Kremi en iyisi · May 6, 2021 at 15:16

I was able to find good advice from your content.

golden goose · May 6, 2021 at 17:05

A lot of thanks for your own efforts on this blog. My daughter take interest in carrying out investigations and it’s simple to grasp why. Almost all hear all of the lively tactic you deliver very useful guides on your web blog and even recommend participation from people on this concern and our favorite child is truly starting to learn a great deal. Take pleasure in the remaining portion of the new year. Your doing a powerful job.

birkin bag · May 6, 2021 at 17:05

I would like to point out my affection for your generosity for people that must have help on this one subject matter. Your personal commitment to passing the message all-around became unbelievably advantageous and has continuously encouraged girls just like me to achieve their targets. Your amazing helpful advice signifies a whole lot to me and substantially more to my mates. With thanks; from everyone of us.

hermes birkin bag · May 6, 2021 at 17:06

I would like to show my affection for your kind-heartedness for individuals who really want assistance with in this question. Your special dedication to getting the message up and down turned out to be definitely valuable and has regularly permitted workers just like me to arrive at their goals. Your own valuable suggestions indicates a whole lot a person like me and still more to my mates. Thanks a ton; from all of us.

Php Shell · May 6, 2021 at 19:52

I’m not sure exactly why but this blog is loading extremely
slow for me. Is anyone else having this problem or is it a issue on my end?
I’ll check back later and see if the problem still exists.

Youtube Abone Satın AL · May 6, 2021 at 21:13

Hi there to all, it’s truly a fastidious for me to visit this website,
it includes precious Information.

kyrie 6 shoes · May 7, 2021 at 12:31

I wanted to compose you this little observation so as to say thanks a lot yet again about the amazing things you have discussed above. It’s so open-handed of you to allow freely all that numerous people would’ve made available as an electronic book to help make some cash for their own end, notably seeing that you might well have done it in case you desired. These pointers additionally acted to become great way to be certain that other people online have similar keenness really like mine to learn lots more with respect to this problem. Certainly there are many more enjoyable periods up front for folks who discover your blog post.

a bathing ape · May 7, 2021 at 12:31

I’m just writing to make you be aware of what a notable encounter our child had going through yuor web blog. She noticed too many issues, which included what it’s like to possess an ideal teaching style to make most people really easily thoroughly grasp a number of tortuous subject matter. You really surpassed my desires. Thank you for producing these important, safe, revealing as well as unique thoughts on your topic to Tanya.

yeezy boost 380 · May 7, 2021 at 12:32

I must express some appreciation to the writer just for rescuing me from this type of incident. Because of browsing throughout the search engines and coming across principles which are not helpful, I was thinking my entire life was well over. Existing devoid of the solutions to the difficulties you have resolved through this blog post is a critical case, as well as ones which may have adversely affected my entire career if I had not come across your web site. That know-how and kindness in dealing with all the things was precious. I’m not sure what I would’ve done if I had not discovered such a stuff like this. I can at this time look ahead to my future. Thanks a lot so much for your skilled and result oriented guide. I will not think twice to recommend your site to any individual who desires recommendations on this topic.

leke kremi kullananlar · May 7, 2021 at 12:45

After going over a few of the articles on your blog, I truly appreciate your way of
blogging. I bookmarked it to my bookmark site list and will be
checking back in the near future. Please visit my web site as well and
tell me what you think.

takipçi satın al · May 7, 2021 at 12:55

I do consider all the concepts you have presented for your post.
They’re very convincing and can certainly work.
Nonetheless, the posts are very short for novices.
Could you please extend them a little from subsequent time?
Thank you for the post.

supreme · May 8, 2021 at 07:52

I precisely wished to thank you very much again. I’m not certain the things I would’ve undertaken in the absence of the entire methods discussed by you relating to my subject matter. It seemed to be a real traumatic setting in my position, but observing your specialised tactic you processed the issue forced me to weep for contentment. I am just happier for the information and thus wish you are aware of an amazing job that you’re getting into instructing people all through your webpage. I am sure you haven’t met all of us.

lebron shoes · May 8, 2021 at 07:52

I simply desired to thank you very much once again. I am not sure the things that I could possibly have handled in the absence of the solutions discussed by you concerning that problem. It was before an absolute intimidating problem in my position, however , taking a look at a skilled mode you managed the issue forced me to cry for contentment. I will be grateful for the help and pray you realize what an amazing job that you are carrying out instructing other individuals through the use of your web site. Most probably you have never got to know any of us.

golden goose outlet · May 8, 2021 at 07:53

Thanks a lot for giving everyone an extraordinarily brilliant opportunity to read in detail from this blog. It’s always very pleasing and full of amusement for me personally and my office friends to visit your web site at minimum three times per week to read through the fresh issues you will have. And lastly, we are always fascinated with your sensational strategies served by you. Some 4 areas in this post are completely the most suitable I have ever had.

yeezy boost 350 v2 · May 9, 2021 at 03:32

I intended to send you that tiny word to finally thank you very much over again about the superb opinions you have provided in this article. It has been certainly surprisingly generous of you to deliver without restraint exactly what a number of us could have sold for an e book to earn some bucks for themselves, primarily considering that you could possibly have tried it if you ever considered necessary. The strategies as well served to be the easy way to realize that other people have the identical eagerness just like mine to understand significantly more regarding this issue. I know there are millions of more enjoyable periods up front for individuals who read carefully your blog post.

curry 6 shoes · May 9, 2021 at 03:33

I wish to show some thanks to the writer just for bailing me out of this type of crisis. Just after researching through the the web and getting solutions which are not productive, I believed my entire life was done. Being alive without the presence of solutions to the issues you have resolved by means of your main report is a crucial case, and those that would have in a wrong way damaged my career if I had not encountered your site. Your good capability and kindness in touching every part was tremendous. I don’t know what I would’ve done if I hadn’t discovered such a step like this. I’m able to at this moment relish my future. Thanks a lot very much for this impressive and results-oriented help. I won’t be reluctant to refer your blog to anyone who requires counselling on this situation.

adidas yeezy · May 9, 2021 at 03:33

I simply desired to say thanks again. I do not know the things I would have achieved without the type of smart ideas discussed by you concerning this field. It became a very frustrating crisis in my position, however , noticing a new skilled way you treated that made me to cry with fulfillment. I am happier for this service as well as wish you find out what a great job you are always putting in teaching people via a blog. Most likely you haven’t got to know all of us.

jordans · May 9, 2021 at 23:27

I wanted to post you one very little word so as to say thank you over again relating to the beautiful tactics you have featured here. This is quite tremendously generous with people like you to deliver extensively all that a number of us would’ve supplied for an e-book in order to make some bucks for their own end, principally now that you could have done it if you ever considered necessary. The suggestions likewise served to become a great way to know that many people have a similar dreams like mine to see great deal more in terms of this matter. I am certain there are lots of more pleasurable occasions ahead for many who read carefully your website.

lebron james shoes · May 9, 2021 at 23:27

Thank you for each of your work on this site. My niece take interest in conducting internet research and it’s really easy to understand why. I learn all of the lively medium you deliver functional thoughts through the web blog and therefore recommend response from website visitors on the area so our favorite daughter is certainly being taught a whole lot. Take advantage of the remaining portion of the year. You are always carrying out a fabulous job.

lebron 17 · May 10, 2021 at 18:51

I have to show some appreciation to you just for bailing me out of such a problem. Right after scouting through the the web and meeting advice which are not beneficial, I was thinking my entire life was well over. Existing without the answers to the issues you have fixed through your main website is a critical case, and the ones that would have in a negative way damaged my career if I had not noticed the blog. Your capability and kindness in playing with all the details was tremendous. I’m not sure what I would’ve done if I had not encountered such a point like this. I can at this moment look forward to my future. Thanks a lot very much for this impressive and result oriented guide. I will not be reluctant to refer the blog to anyone who should get support about this problem.

curry shoes · May 10, 2021 at 18:51

I and my guys happened to be following the nice tips and hints located on the blog while before long got a terrible suspicion I had not expressed respect to you for them. The women were definitely so joyful to study all of them and already have in truth been using those things. Thank you for getting very kind and then for deciding upon this sort of amazing subject areas millions of individuals are really wanting to be informed on. My very own sincere regret for not expressing gratitude to you earlier.

kyrie 7 · May 10, 2021 at 18:52

A lot of thanks for all of your labor on this site. Gloria enjoys setting aside time for research and it’s really obvious why. Most of us hear all about the dynamic mode you make simple thoughts via your web blog and as well as encourage participation from the others on this idea plus our own simple princess is without a doubt starting to learn so much. Enjoy the remaining portion of the year. You’re performing a brilliant job.

JimUnita · May 11, 2021 at 04:47

[url=https://cialisxtab.com/]where can i buy cialis in australia with paypal[/url] [url=https://clomidmedi.com/]where can you buy clomid[/url]

비아그라복용법 · May 11, 2021 at 05:01

tomorrow airline

부산출장마사지 · May 11, 2021 at 05:11

to him. Pretty sure he’s going to have a good read. Thanks for sharing!

실시간스포츠중계 · May 11, 2021 at 05:17

up to date like this. Thanks for sharing.

라리가중계 · May 11, 2021 at 05:19

Treatment low cerebral arteries, most stock malignancies, esophageal neonatology compatibility associations. levitra pills Inonhu bgyxfu

축구중계 · May 11, 2021 at 05:21

Very interesting info!Perfect just what I was searching for!

스포츠중계 · May 11, 2021 at 05:48

TOTE UP or amputation is present is a febrile influenza that has change more proverbial in patients usually. online viagra viagra discount

epl중계 · May 11, 2021 at 05:53

Usually I do not read post on blogs, however I

넷마블머니상 · May 11, 2021 at 05:56

unknown [url=http://cialisle.com/#]canada cialis online[/url] before cialis dosage uk hotel

정보이용료현금화 · May 11, 2021 at 05:57

upon your website and in accession capital to assert that I get actually enjoyed account your blog posts.

윈조이머니상 · May 11, 2021 at 06:00

Undeniably consider that that you said. Your favourite reason appeared to be at the

해외스포츠중계 · May 11, 2021 at 06:01

topic to be really something which I think I’d by no means understand.

정보이용료현금화 · May 11, 2021 at 06:04

upon your website and in accession capital to assert that I get actually enjoyed account your blog posts.

비아그라사이트 · May 11, 2021 at 06:05

Undeniably believe that which you stated.

Leave a Reply

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