Digital Gold vs Gold ETF: Which is more 'powerful'? Where should you invest?
Digital Gold vs Gold ETF Investment: Investing in gold is a tradition in India. It is a companion in difficult times and also a symbol of prosperity. But now the time is gone when one had to go to a goldsmith's shop and bargain to buy gold. In today's digital era, there are two of the smartest and most popular ways to buy gold - Digital Gold and Gold ETF (Gold Exchange Traded Fund).
But hearing the names of these two, it seems that they are the same, so most people get confused. Whereas this is not the case at all. The way of working, benefits, rules, and charges of both are completely different. Let's know which option is more 'powerful' for you.
What is digital gold?
This is the easiest and newest way to buy gold.
How does it work?
You can buy 24-carat pure gold directly from your favorite payment app (like Paytm, Google Pay, PhonePe) or the website of companies like MMTC-PAMP. The gold you buy is kept safe in an insured wallet in your name.
Who is it best for?
This is best for those who are investing in gold for the first time, who do not have a demat account, and who want to start with a very small amount (like ₹ 1, ₹ 10, ₹ 100).
What is a Gold ETF?
ETF means Exchange Traded Fund.
How does it work?
A gold ETF is a type of mutual fund that invests in gold. You can buy and sell it on the stock exchange (NSE/BSE) just like the shares of a company. 1 unit of Gold ETF is usually equal to 1 gram of gold.
Who is it best for?
This is made for investors and traders who have a demat account, who want to trade in gold, and who need more liquidity (easy buying and selling facility).
Which is better for you?
You should choose digital gold if...
You want to start small.
If you want to add gold with a small amount like ₹100, ₹500, or ₹1000 every month, then digital gold is best for you.
You do not have a demat account.
If you do not want to get into the hassles of the stock market and want to buy gold without a demat account, then this is the only digital option.
You need real gold in the future.
If your goal is to gradually accumulate gold and bring it home in the form of gold coins or biscuits in the future, then digital gold provides this facility.
You want to give a gift, you can easily gift digital gold to anyone.
You should choose a gold ETF if...
You are an experienced investor.
If you already have a demat and trading account, then buying an ETF is very easy for you.
You need high liquidity.
If you want to trade gold like a stock and want your money to reach your account immediately, then an ETF is better.
You want a low-cost investment for the long term.
In the long run, the expense ratio of a gold ETF is less than the spread of digital gold.
You want a regulated product: Gold ETFs operate fully under SEBI regulations, which gives them an additional layer of security.
Disclaimer: This content has been sourced and edited from TV9. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.
