Investing in gold: If you don’t want to buy jewellery or bars, there are several ways to do it digitally

Investing in gold: If you don’t want to buy jewellery or bars, there are several ways to do it digitally
  • If you are looking to avoid possession of physical gold, there are some options like investing in digital gold, sovereign gold bonds, gold mutual funds and gold exchange traded funds.
  • Among other things, gold helps to diversify an investor’s portfolio.
  • Gold has always been a preferred investment for Indians because of high liquidity, inflation beating capacity and also the prestige that comes along with it.
Since ages, gold has been a traditional way of investment for most Indians led by its high liquidity, inflation-beating capacity and also the prestige that comes along with it. Gold is considered a safe haven for investors during uncertain times.

For the longest time, gold could only be bought in physical form via jewellery, coins, bars and so on. However, with the passing of time and to overcome the limitations of physical gold, several ways of gold investments have emerged.

Let us look at some of the options to invest in gold through digital platforms.

Digital gold

It allows you to purchase the precious metal online, but eliminates the need to physically store it. Digital gold can be bought online through fintech platforms like Groww, Kuvera etc., and through brokers as well. The gold purchased as digital commodity will be stored in insured vaults by the seller on behalf of the customer. All you need is internet/mobile banking and you can invest in gold digitally anytime, anywhere. Moreover, you can invest an amount as low as ₹10.

Here is how to invest in digital gold via fintech platforms:

  • Enter an amount in rupees or grams
  • Complete the know you customer (KYC) process
  • Pay for the investment
  • Store your gold in a secured locker
  • Later, when you sell you can choose to sell your gold digitally on the platform or take physical delivery of the gold. You can request for a doorstep delivery of your gold in the form of coins or bullion.

Sovereign gold bonds

Sovereign gold bonds (SGB), a substitute to physical gold, is a paper issued by the government denominated in terms of grams of gold. Basically, SGBs give investors an exposure to gold, but not in a physical form like gold bars or jewellery.

The Indian government had initiated the investment options in 2015 as an alternative to owning physical gold. These bonds have a term of eight years with a lock-in period of five years. However, that does not necessarily mean that the investment needs to be compulsorily held till maturity. Investors can do premature redemptions.

Additionally, gold bond investors have the option of selling the bonds anytime on stock exchanges.

Gold exchange traded funds (ETFs)

Gold ETFs invest in gold bullion as it aims to track the domestic physical gold price. They are passive investment instruments that are based on gold prices and invest in gold bullion. Hence gold ETFs reflect the current gold prices unlike physical gold prices, which vary across India depending on local taxes in each state, transportation cost and other related costs.

Since ETFs are listed on an exchange, they offer high liquidity. You can buy or sell your holdings at any time during the day at the real-time price of gold.

Gold mutual funds

Gold mutual funds are a type of mutual fund that invest its corpus in various gold forms including physical gold, gold mining companies. The performance of gold funds is dependent on the movement of stock prices of these companies.

Since gold mutual funds are actively managed by a fund manager, it has the potential to offer higher return as compared to gold ETFs that mimic a market index.

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