Gold has been seen as a wealth and status symbol since time immemorial and is unarguably one of the safest investment options out there. The low volatility and ability to hedge assets during economic crises make it favorable among investors. With gold investments in their arsenal, investors have a chance to diversify their portfolios. Historically, the return on gold investments has proved to be highly fruitful. From physical gold to mutual funds and virtual gold, there are many options for investors looking to invest in gold. Here are some of the popular methods of investing in gold.
Investing in physical gold is one of the oldest and most traditional methods to invest in gold. Physical gold can be coins, bars, or jewelry. They all have value at melt. However, there are risks associated with each of them. Investing in smaller bars and smaller coins is more beneficial as they provide much more liquidity. Heavy gold bars and coins can be difficult to buy and sell, thus proving disadvantageous for an investor. Buying gold as jewelry has its own disadvantages. Buying jewelry at retail prices involves a substantial markup, including the product’s manufacturing cost. Although physical gold feels good to own, significant problems associated with them are the storage risks and insurance cost that comes along with it. Another disadvantage might be that it cannot be bought in lower denominations of currency.
Gold ETFs and Mutual Funds:
A popular alternative to investing in physical gold is to invest in instruments such as ETFs or Mutual Funds. ETF investments can be purchased and sold through a Demat account just like other stock investments. One of the major benefits of gold ETFs is that the minimum investment can be as small as the price of a single ETF, which can be as small as the price of ₹1000. In addition, the average expense for gold ETFs is much smaller compared to other gold investments. For small investors, this is more suitable, as it is cost-effective and safer compared to physical gold. Mutual funds are very similar to ETFs as in they can be bought and sold using a Demat account, and it is also one of the safest and easiest methods to invest in gold. Significant advantages of investing in mutual funds include low minimum investment requirements, low expenses, and portfolio diversification among different companies.
Digital gold is a fairly new method to invest in gold. Unlike physical gold, digital gold is bought and sold online. However, it is to be noted that, unlike gold ETFs, for every gram of digital gold you purchase, an equivalent of physical gold will be stored in an insured vault. You can also get the physical equivalent delivered to your home. Apart from the ease with which digital gold can be exchanged, another significant advantage of digital gold is the option of having no minimum limit-one can invest in digital gold for as low as ₹1. One significant risk associated with digital gold is the unavailability of a regulatory body.