gold is placed in high regard as an investment. Due to some influencing factors such as high liquidity and inflation-beating capacity, gold is one of the most preferred investments in India. Gold investment can be done in many forms like buying jewelry, coins, bars, gold exchange-traded funds, Gold funds, sovereign gold bond scheme, etc.
Though there are times when markets see a fall in the prices of gold but usually it doesn’t last for long and always makes a strong upturn. Once you have made your mind to invest in gold, you should decide the way of investing meticulously. If you want to know more about Gold Investment plans and other facts like different ways to buy and invest in gold, how to invest in gold online and much more, you are at the right place.
How to Invest in Gold: Best Gold Investment Plans
Coming to the most important part which deals with – “How to invest money in gold.” Well, there are some conventional and modern types of gold investments preferred by people. In conventional forms, it was just buying physical gold in the forms of jewelry, coins, billions, or artifacts.
Gold ETFs (Exchanged Traded Funds) is similar to buying physical gold but the only difference is you don’t actually buy the physical gold. You don’t have to go through the hassles of storing the physical gold, instead, the gold bought is stored in Demat (paper) format. On the other hand, gold funds deal with investing in gold mining companies.
Let’s delve a bit deeper into the differences between the basic gold investment methodologies, Viz.
- Physical Gold
- Gold ETFs (Exchanged Traded Funds)
- Gold Mutual funds
- Sovereign Gold Bonds
Sovereign Gold Bonds are the safest way to buy digital Gold as they are issued by the Reserve Bank of India on behalf of the Government of India with an assured interest of 2.50% per annum. The bonds are denominated in units of grams of gold with a basic unit of 1 gram. The maximum investment one can make is of 4 kg. These bonds have a tenor of eight years with an exit option from the fifth year onwards. It’s again a hassle-free way of gold investing as you have the ownership of gold without any physical possession.
What Documents do you need to Invest in Gold?
More than Rs. 2 lakhs of investment in physical gold demands for the PAN Card, whereas in ETFs, you shall have to open an account with a brokerage firm followed by a Demat account with the same firm. For investing in SGBs (Sovereign Gold Bonds), KYC required are the documents required to buy Physical gold (Aadhar, PAN, Voter ID or Passport).
Why Should you Prefer Investing in Gold?
For a conventional investor, the most important criterion is safety, liquidity and profitable returns. You can expect to meet all these criteria while investing in gold. However, some investors consider gold returns as extremely volatile but gold proves to be a safe haven in times of uncertainty for many investors. Let’s contemplate on some points that prove gold investment can be a wise decision:
No matter what the rate of inflation is, returns on gold investment have always proved to be in line with it. In a nutshell, one can consider it is an inflation-beating investment
Another major factor which calls for gold investment is the liquidity; it provides excellent liquidity to the investors
The Bottom Line
Every investment has benefits and drawbacks associated with it. If you are not in favor of holding physical gold, you can go for other alternatives ETFs, gold funds or SGBs. Although gold is not a passive investment like stocks and bonds that provide you with a regular income in the form of interests and dividends, it can provide you excellent liquidity and also beat inflation.
Apparently, the advantages of investing in gold usually outperform the disadvantages. In short, for all those investors who don’t need the funds in the short term can opt for Sovereign gold bonds and for investors prioritize liquidity, can opt for gold ETFs and funds.