Explained: From Sovereign Gold Bond to Jewellery, gold investment types you need to know
The growing culture of digitalisation of investments and smooth online banking functionality have opened number of options for people, looking to invest in gold.
Indians are fond of buying Gold as an investment. It has been one of the most common tools of investment for ages. While time has passed, the investment styles have also changed. Gone are the days, when people only used to invest in jewellery or coins as their investment into this precious commodity. The growing culture of digitalisation of investments and smooth online banking functionality has opened a number of options for people, looking to invest in gold. India is one of the top gold importers in the world, while there are many other kinds of gold investments available in the market.
Types of gold investments in India:
1. Jewellery and coins: Jewellery and gold coins are one of the traditional kind of gold investments available. Women are the major buyers as they are more fond of wearing gold in the form of jewellery. While Jewellery is never considered as an ideal gold investment due to its additional expenses (making charges) and care. Also, the resale value of jewellery is always less than the current gold price, due to wear and tear.
2. Sovereign Gold Bond Scheme: SGB is issued by the government but they are not available on an immediate basis. As the government opens a window for the fresh sale of SGBs to investors usually in every 2-3 months. The investors looking to purchase SGBs get a week time but they can always buy them (at market value) which are listed in the secondary market. The best thing about SGBS is 2.50 per cent (fixed rate) interest per annum on the amount of initial investment.
3. Gold ETFs: Gold ETFs are open-ended mutual fund schemes that invest the money collected from investors in standard gold bullion of 99.5 per cent purity. These funds are of open-ended in nature, that are traded on a stock exchange similar to shares of an individual company. The investors can buy and sell units of gold ETF anytime, while one needs to have a demat account to trade in Gold ETFs.
4. Digital Gold: Digital gold is offered by various mobile banking platforms. This type of gold investments is a virtual gold kept online and can be sold anytime at a market price. The best thing about digital gold is no tension of wear and tear, no storage, no making charges, highest liquidity, no risk of theft at all.
5. Gold savings scheme: It is a scheme where one can deposit gold and earn a higher quantity of gold by the end of a year. Sometimes jewellers also give a monthly payment and also return your gold at the end of the term. The main objective of this scheme is to mobilise the gold, make it available from banks on loans, reduce the dependence on imported gold and conserve foreign exchange. Different jewellers have a different version of gold saving schemes.