With gold prices soaring, many Indian investors are seeking alternatives to buying physical gold this festive season. High gold prices, along with the costs of storage and making charges on jewellery, make non-physical gold options a smarter and more convenient investment. Here are some beneficial ways to invest in gold this Dussehra-Diwali without actually holding the metal:
- Gold ETFs (Exchange Traded Funds): Gold ETFs allow investors to invest in gold through stock exchanges without physically holding the metal. These funds track gold prices and offer liquidity, as they can be bought and sold just like shares. This makes them a highly accessible option for those with a demat account. They eliminate issues like storage and purity, while still providing exposure to gold’s price movement.
- Gold Mutual Funds: For those without a demat account, gold mutual funds are a simpler way to invest in gold. These funds invest in gold ETFs, allowing you to benefit from the rise in gold prices without the need for direct market trading. Another advantage is that you can opt for SIP (Systematic Investment Plan), making it easier to invest in gold periodically with small amounts, instead of a lump sum.
- Sovereign Gold Bonds (SGBs): Backed by the Government of India, SGBs offer a secure way to invest in gold. They are issued in gram denominations and come with the added benefit of a fixed interest rate (currently around 2.5% per annum) in addition to the appreciation of gold prices. These bonds also have tax advantages, as the capital gains at maturity are tax-free if held until maturity.
- Digital Gold: Digital gold allows you to buy gold in small quantities online, and your purchases are backed by actual gold stored securely by the provider. Many fintech platforms offer digital gold, enabling investors to accumulate gold without worrying about purity or storage. You can even convert digital gold into physical gold at a later date if needed, or continue holding it digitally.
- Gold Accumulation Plans: Similar to a recurring deposit, gold accumulation plans allow you to invest a fixed amount periodically. Over time, these small contributions accumulate into larger amounts of gold. These plans help investors mitigate the risk of price fluctuations by spreading out the purchases.
Benefits of Non-Physical Gold Investment
- No Storage Worries: Traditional gold investments come with the hassle of safekeeping and security. Non-physical gold options, such as ETFs, mutual funds, and digital gold, remove this concern entirely.
- Lower Costs: With non-physical gold, you avoid making charges and other costs associated with buying jewellery. Gold ETFs and SGBs track gold prices directly, and you only pay a minimal brokerage or government fee.
- Liquidity: Most non-physical gold investments, like ETFs, mutual funds, and digital gold, offer higher liquidity. Investors can sell their holdings anytime during market hours, making it a more flexible option.
- Tax Efficiency: Sovereign Gold Bonds provide an added advantage of tax-free capital gains if held until maturity, making them particularly attractive to long-term investors.
As the festive season approaches, these non-physical gold investment options present a smart and efficient way to benefit from rising gold prices without the drawbacks of holding physical gold.
