How to make the most of gold investment: Forget jewellery, put your money in these instruments
There are some of the best alternatives of gold jewellery that can reduce your overall investment cost and increase your returns from gold investment in the long term.
Indians are fond of gold jewellery. It is very popular among Indian women and this is why India is one of the largest consumers of the yellow metal globally. However, for mere 10gm of gold, you may need to save a lot and it has been considered a luxury investment for years now. People also buy gold coins or bars but these options also become constraints sometimes. This is where alternatives to gold jewellery or coins comes in handy. You can save your making charges, storage costs, risk of theft, cost reduction, liquidity etc.
Here are some of the best alternatives of gold jewellery that can reduce your overall investment cost and increase your returns from gold investment in the long term:
1. Gold ETF
ETFs are an exchange-traded fund and just like shares of several companies, they are listed on stock markets. Gold ETFs can be bought or sold via demat account or broker. There are a number of gold ETFs listed on the Indian stock exchanges. You can buy gold in units, where one unit stands for one gram of gold. It also has an annual expense of 1%. The gold purity in gold ETFs is 0.995% or more. Instead of accumulating gold for the long term, choosing gold ETFs is easier and the safest way as there is no question of purity, no making charges, no storage risks and no additional price reduction at the time of selling. The gold ETFs do not entertain SIPs.
2. Gold Mutual Funds
The gold mutual funds invest in gold mining companies and returns from such funds are dependent on the performance of these companies only. The investment demand for gold is borne out of the economic uncertainties as gold is considered to be a safe haven when equity markets are tumbling. Difference between demand and supply also govern the gold prices and the units of gold funds can be bought from the respective fund house without Demat Account. You can invest in gold funds by means of SIPs.
3. Sovereign Gold Bond Scheme
Your gold investment will never fetch you a recurring return as you only gain an amount if you sell your gold at a higher price. However, the Government of India's Sovereign Gold Bonds Scheme can earn you an assured interest rate eliminating risk and cost of storage. It has lots of benefits over other gold investments like attractive interest with asset appreciation opportunity. Redemption is linked to gold price elimination of risk and cost of storage, exempt from the capital gain tax if held till maturity etc.
4. Gold Saving 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.
5. Digital gold
The new concept of digital gold lets you buy gold even in smaller denominations via digital platforms. Earlier, to invest in physical gold many people had to wait till they saved enough amount to make the minimum or desired purchase. With the advent of Digital Gold that is no longer the case as you can buy the precious metal in denominations as low as Rs 10. As compared to other asset classes, gold is considered to be the most liquid asset. Digital Gold gives you freedom from storage issues and long-term expensive costs and is a safe gold investment.