Gold Investment: 5 Ways to Buy Gold – Things to Keep in Mind Before Visiting a Jeweler This Dhanteras-Diwali
Discover 5 excellent ways to invest in gold this Dhanteras-Diwali. Earn returns by investing in physical gold, Gold ETFs, digital gold, SGBs (Sovereign Gold Bonds), and EGRs (Electronic Gold Receipts).
Buying gold during Dhanteras and Diwali is considered auspicious. While some prefer to purchase gold jewelry, others view gold as an investment. Investing in gold is not limited to buying jewelry from a store; there are various other ways to invest and potentially benefit from price appreciation or returns. Depending on your budget, you can choose from different forms of gold, including physical gold, Gold Exchange-Traded Funds (ETFs), digital gold, and Electronic Gold Receipts (EGRs). For your convenience, we explain each of these options below.
5 Ways to Invest in Gold This Dhanteras and Diwali
1. Physical Gold: Coins, Bars, and Jewelry
In many households, people purchase jewelry on Dhanteras. However, those who wish to invest in gold without the added cost of intricate designs can opt for gold coins or bars. If you invest in gold jewelry, the price includes the cost of craftsmanship and design. Additionally, you are required to pay Goods and Services Tax (GST) on both the gold itself and the making charges. If you decide to sell this jewelry in the future, you may not recover the full amount spent on these additional costs. Therefore, if your primary goal is investment, be sure to take these extra expenses into account.
2. Gold Exchange-Traded Funds (ETFs) and Gold Mutual Funds
Gold ETFs invest in physical gold (gold bars or bullion) and gold-related instruments. They can be purchased on the stock exchange through a demat account. They track the prices of pure gold and can be bought or sold during stock market trading hours.
Additionally, you may consider investing in gold mutual funds (which, in turn, invest in gold ETFs). These can be purchased through mutual fund platforms or fund houses.
3. Digital Gold
Digital gold allows individuals to purchase gold online, starting with very small quantities. Customers can use payment apps such as Paytm, PhonePe, and GPay to buy digital gold; you can start with an investment as low as ₹1. Digital gold also tracks the prices of pure gold.
However, digital gold is not regulated by the Reserve Bank of India (RBI) or the Securities and Exchange Board of India (SEBI); therefore, one should understand the associated risks before investing.
4. Sovereign Gold Bonds (SGBs)
SGBs are government securities, the value of which is denominated in grams of gold. They serve as an alternative to holding physical gold. Investors pay an 'issue price,' and upon maturity, the bonds are redeemed, with the investors receiving their funds back. These gold bonds are issued by the Reserve Bank of India (RBI) on behalf of the Government of India.
5. Electronic Gold Receipts (EGRs)
Another option for investing in gold without holding physical gold is the 'Electronic Gold Receipt' (EGR).
EGRs are securities traded on an exchange that are backed by standard-quality gold. Through these, the price of gold is determined based on market conditions; it can be held in electronic form, and can be bought or sold at any time in specific quantities and with guaranteed purity. You can also convert them into physical gold.
