Best Way to Invest in Gold in India (2024) (2024)

Online stock investment is becoming increasingly popular due to the accessibility of demat accounts and trading for small investors, as well as the convenience of internet connectivity. Because of this, anybody who invests in stocks is somewhat familiar with online trading and investing. However, the majority of these people were ignorant that they could invest in gold online until the last year or two. Invest in Gold should be included in individual portfolios, preferably as an exchange-traded fund (ETF) to operate as an inflation hedge and perhaps offer an alternate asset class unconnected to other traditional financial assets. Well, In this blog we are going to discuss the Best Way to Invest in Gold in India.

What Are Gold ETFs?

Gold-tracking exchange-traded funds (ETFs) allocate client funds to standard Invest in gold bullion with a purity of 0.995.

Each unit used to measure these instruments is equivalent to one unit of gold. Consider the scenario where the price of UTI Mutual Fund’s Gold Share, one of the earliest Gold ETFs, was Rs. 2,050 per gram at the time this article was published. Unlike other physical types of gold, ETFs may be traded and kept in an electronic account much like stocks.

Why Invest In Gold ETFs?

Small investors may diversify into gold with the help of transparent gold exchange-traded funds (ETFs), which offer a practical and efficient platform. In addition to its benefits over conventional gold investing strategies, individual retail investors have additional reasons to use Gold ETFs in their investment portfolios. Investing exclusively in exchange-traded funds that follow Invest in gold offers several noteworthy advantages, including:

Purchase Cost: Gold ETF purchases cost the same as the brokerage fees or around 0.50 percent. While the cost of producing jewelry may account for 15%–25% of the item’s value, coins and bars may have a 10%–20% markup.
Maintenance: The Gold ETF is kept in a demat account with low maintenance fees and a little over 1% in fund management expenses. The additional fees are negligible if you already have a trading and demat account. However, the costs of real gold insurance, including storage fees, can vary from several hundred to several thousand dollars.
Safety: When investing in gold ETFs, the physical risks connected with gold—such as theft, breakage, loss, etc.—are significantly diminished. People who start accumulating cash, jewelry, and other valuables for valid purposes are constantly at risk of theft.
Selling Costs: This is comparable to buying an ETF that tracks gold, although bars, coins, and jewelry may cost far more. The markup on jewelry is typically between 10% and 20%. Moreover, selling it to the jeweler where you bought it initially is the only way to get the reduced markup. In other circ*mstances, it will line closer with the top end.
Small Denomination: Because retail investors may only acquire one gram at a time and accumulate, small investors can join at a reduced cost. One can begin with one unit and gradually add more.

However, bear in mind that while gold exchange-traded funds (ETFs) are good ways to invest, they may not help you instantly in your quest to acquire real gold for a marriage or other traditional needs. The same approach to investment growth is still accessible, though.

Best Way to Invest in Gold in India

During Fund Offering: Purchasing a new fund offer from a Invest in Gold fund in this instance entails an entrance load of 1.5% to 2.5%. Alternatively, this is the Best Way to Invest in Gold in India to purchase an ETF that is listed on the exchange and is currently trading. This is due to two factors: first, buying straight from the market would result in significant savings on brokerage costs (0.50%); and second, the volume, trading history, and fund performance of the new ETF are all unknown.
Buying from the Market (after listing): This is the Best Way to Invest in Gold in India because the cost is obvious and you may sell the same day, or after a few days, weeks, or months if that’s when you’d want. This is the primary advantage of using ETFs for investing. Choosing a fund with a longer track record and high volumes (liquidity) might be advantageous.

For instance, the Gold Bees of Benchmark Mutual Fund and the Gold Share of UTI Mutual Fund are both reputable participants with reasonable volume.

A few gamers who joined recently have lower volumes. Even if the funds that are now listed and operating don’t provide a wide variety of products, liquidity is important since low volumes might make buying or selling difficult.

Best Way to Invest in Gold in India: Sovereign Gold Bonds

Let’s start by analyzing the information in the transcript. Government-backed gold investments are known as Sovereign Gold Bonds, or SGBs for short. On the specified maturity date, the government agrees to repay you the bond’s initial value, which will be adjusted to account for the current price of gold.

On platforms like Zerodha or Groww, there are several SGBs to choose from. Each one has a distinct code that signifies when it matures. The bond matures, for example, on July 20,27, if it is designated “SGB July 27.” It’s important to understand that there might be large price changes and that these bonds are subject to active trading.

How to Choose the Right SGB?

These actions will help you make an informed decision:

Visit the NSC’s website: Go to the NSC website’s Sovereign Gold Bond section first. This is a list of all SGBs that are available for purchase on the secondary market.
Break the Codes: Identify the codes associated with each relationship. Usually, the month and year of maturity are added to the code after “SGB”.
Look Over the Prices: Sort the bonds according to the latest traded price (LTP) in ascending order. This phase is crucial to determine which bonds are currently being offered at the best prices.
Consider the Length of Your Investment: Determine how long you want to invest in the SGB. Bonds with closer maturity dates are often exchanged at higher prices because of the decreased risk of capital gains tax.
Recall the Issue Price: Never forget that the interest you get on an SGB is determined by the bond’s issue price, which is its initial purchase price, rather than its current market value. For every bond that interests you, note the issue price.

Conclusion

Having a small holding of gold in your portfolio is essential since it may serve as an inflation hedge. Second, if financial systems collapse, gold will offer a haven since it is unattached to other financial assets. Many commentators believed that the record $1000 per ounce gold price in March 2008 was a bubble or exaggeration.

We’re not saying you should put all of your money in gold, but it could be the Best Way to Invest in Gold in India and allocate 15% to 25% of your overall funds to gold. Although the traditional approach of amassing Invest in gold, which was adopted by our ancestors, is still valid today, developments in technology and finance have brought about a swift transformation in the means and vehicle of gold investment.