Indians’ passion for gold is not hidden from anyone. Buying gold has always been a popular ritual for weddings, religious occasions as well as festivals. But it is much more than just being another investment option or status symbol. It is also insured against financial emergencies. Earlier, gold could only be brought in its physical forms such as jewellery, gold bars and coins. This form of investment was risky as well as costly. However, today there are many ways in which one can invest in gold. For investors, gold is a safe and risk-free investment that can be bought through ETFs (Exchange Traded Funds) as well as mutual funds and stocks. Gold investments are considered risk free as gold prices are inversely related to equities.
Here are some cost-effective options for investing in the yellow metal:
1) Sovereign Gold Bond (SGB)
SGBs are a way for investors to hold gold in an alternative way to physical gold. This scheme was started by the Government of India. SGBs are issued by the Reserve Bank of India in late 2015. The scheme has a lock-in period of 5 years and on maturity, the investment made is redeemed in cash.
2) Digital Gold
Gold can be bought digitally through various platforms. The minimum investment amount for Digital Gold can be as low as Rs. 1. This gold can be given to you in the form of physical gold. Most of these digital platforms have tie-ups with traders and gold makers.
3) Gold Exchange-Traded Funds
Gold ETFs are investments that are traded in the stock market. To invest in Gold ETFs, you need to have a demat account with a bank. Investing in Gold ETFs does not mean that you have physical gold. This means that you have invested in gold in electronic form.
4) Gold Mutual Fund
It is a scheme in which the investments of various investors are pooled together and invested in a particular scheme. One does not require a demat account to invest in Gold Mutual Funds; They can be obtained through any commercial bank.