Which Is The Best Gold Investment Option For You?

Indian loves gold. We buy gold on every occasion, whether it is a festival, birthday, or even just a promotion. So, buying gold can even be an investment?

At the end of the day, women love gold, and men love investments. So thinking gold as an investment may not be wrong!!

Gold can be considered as an investment because it is a good short term investment with good ROI. It has high liquidity and volatility, which is why it must be considered even as a good investment option.

I have over a decade of experience in investment, and yes, the market is not always right, but I will say gold is one the safest form of investment with guaranteed returns.

“Gold is a treasure, and he who possesses it does all he wishes to in this world and succeeds in helping souls into paradise.

– Christopher Columbus

I would be sharing some of the major types of gold investment, and then you can decide which one you would like to pick up!!

A. Physical Gold Investment

B. ETFs (Exchange Traded Fund)

C. Gold Mutual Funds

D. Sovereign Gold Bond

A. Physical Gold Investment

Physical gold investment is one of the oldest forms of investment. In this investment, you buy gold from the jeweler, which is usually 22% carat pure. You need to pay the price for various other sections like:

a. Making Charges

b. “Storing Charges,” you pay to the bank

c. Impurity

All the above factors cause you to pay more than the actual gold charges.

If you take physical gold, i.e., gold biscuit and coins, these are available in the pure form, where you are charged only for the gold, as there are no making charges.

B. Exchange Traded Fund (ETF)

ETF is another best forms of gold investment. This investment is similar to physical gold investment, but the only difference is that gold is not physically purchased in ETF. One needs a Demat account for investing in ETF.

AS ETF does not involve physical gold, so many things get minimized, i.e.,

a. No making charges

b. No storing charges

c. No impurity

Thus, it is an excellent option to invest when you don’t need gold in the physical form. But ETF includes asset management and brokerage fees. Also, paperwork is required before investment.

C. Gold Mutual Funds

As per the Sensex, 30th June 2020, please refer to the below chart for gold investment in terms of mutual funds.

Years Sensex Returns Gold Returns
5 5% 13%
10 7% 10%
20 10% 13%
30 10% 10%

As per the above chart, gold investment for the short term seems to have a better return. It is important to note that investors should have a proper market understanding for better gold investment.

I have observed that whenever the market falls, there is a hike in the gold price.

Due to Pandemic 2020, the stock market has hit badly, but the gold price is touching the sky in such scenarios.

“An investor must know how to make profits when the market is falling.”

Below are the few gold mutual funds that you can consider for investment.

Axis Gold Fund

HDFC Gold Fund

Aditya Birla Sun Life Gold Fund

ICICI Pru Regular Gold Savings Fund

Canara Robeco Gold Savings Fund

D. Sovereign Gold Investment

Sovereign gold investment is issued by the Reserve Bank of India and guaranteed by the Government of India. It is the best investment as it is secured by the government. There are guaranteed returns, capital appreciation, and also has an interest of 2.5% p.a.

The significant advantages of Sovereign Gold bond are:

a. No design and making charges.

b. No storage risk costs.

c. No impurities.

d. No default and safety risks.

e. No GST and STT.

f. No capital gain tasks.

g. Collateral for loans.

h. Tradable on exchanges.

i. Good long-term investment.

j. Demat Form.

Conclusion

So, I must accept that gold investment, a traditional investment which every one of us is aware of, is a good option to invest if you study the market properly. Understanding the market is the key to success for growing money.

Till then,

Happy Investing!