Physical Gold vs Top Gold ETF vs Digital Gold: Which has given highest return on Rs 5,00,000 investment in 1 year?

Also known as yellow metal, physical gold is the most popular form of it. People buy jewellery made of gold. They also purchase gold coins, bullion and bars. People buy it as an ornament and a source of investment both. 

The purity level of gold can be different. The purest form is 24 carat, which is 99.9 per cent pure.  The price of physical gold can change from city to city based on its supply and demand.

These are mutual funds that track the price of physical gold of very high purity (99.9 per cent). Gold ETFs can be bought and sold in a share market. They invest in gold bars, coins, etc.

Since they track the price of pure gold, investors who don't want to purchase gold in its physical form but want to take benefit of its price appreciation invest in ETFs. ETFs provide liquidity as they can be bought and sold in real time (only during trading hours). An investor needs a demat account to trade gold ETFs.

Digital gold can be bought, sold and held electronically through digital platforms such as apps. It also allows investors to take the benefit of gold price appreciation without holding it in its physical form. Digital gold can be bought in small fractions. 

It provides the convenience of buying, liquidity, transparency of real time price tracking, and digital security. 

We are taking the example of the 24 carat gold price in Mumbai a year ago and today. The price today (April 29, 2025) is Rs 97,970. The price a year ago was Rs 72,600.  

Tata Gold ETF is the top gold ETF in 1 year with a 30.60 per cent return (CAGR). The fund has asset under management of Rs 514 crore, while its net asset value as on April 28, 2025, is Rs 9.2273.

Benchmarked against the domestic price of gold, the fund has given a 36.98 per cent return since its launch in January 2024. With an expense ratio of 0.36 per cent, the ETF has a minimum investment of 100.

The digital price rate may change from platform to platform, but based on international spot gold prices with 99.9 per cent purity, its current price is Rs 93,500.  The price a year ago was Rs 78,963, so there is an increase of 18.41 per cent rate in 1 year.

The increase from Rs 72,600 to Rs 97,970 is 29.75 per cent.

So, the estimated return on a Rs 5 lakh investment in 1 year is Rs 1,48,750.

The 1-year return in the top gold ETF is 30.60 per cent. The estimated return on a Rs 5 lakh investment in 1 year is Rs 1,53,000.

The price rise in digital gold in 1 year is 18.41 per cent.  So, the estimated return on a Rs 5 lakh investment is Rs 92,050.