What comes to your mind when you hear the word gold? Certainly, the physical form of jewellery is the most common picture that our mind creates, right? After all, gold in this form has been one of the most preferred assets in our country for several decades. It's not just considered a great asset but even holds high cultural and traditional values as well.?
However, have you ever attempted to explore the ¡®not-so-known¡¯ ways of purchasing or investing in gold, besides the age-old way of having it as jewellery? In fact, there are multiple ways in which you can add the glitter of gold to your portfolio, especially as you step into the new year 2022. Eager to know? Read on as we unfold this for you.
Gold savings schemes allow you to periodically (mostly monthly) deposit some amount with a jeweller for a fixed tenure, just like you do bank RD (Recurring Deposit) or Mutual Fund SIPs. At the end of the tenure, you can purchase gold from that jeweller for the amount accumulated through such a scheme. However, unlike an RD or SIP,?a gold savings scheme does not offer any interest on the deposited sum. So, the jewellers sometimes offer to give an incentive at the end of such schemes, like paying one instalment every year or giving a gift item, discounting the last instalment etc. This acts as a bonus to cover up for the absence of interest component in this savings scheme.
Also Read:?Does It Make Sense To Invest Your Money In A FD Anymore?
Issued by the RBI, SGBs are government securities denominated in grams of gold. They are one of the substitutes for holding physical gold. Simply put, these are RBI mandated certificates issued against grams of gold, which allow you to invest in gold without the strain of safekeeping the physical form of this asset. SGBs act as a secure investment tool because gold prices are less susceptible to market fluctuations.?
Given that these bonds are issued by the RBI on behalf of the Government of India, a particular window is pre-set for subscription, during which a sovereign gold bond scheme is issued in the name of investors in tranches. Generally, the RBI announces the issuance of the latest sovereign bonds in a press release every 2-3 months, with a usually one week window during which you can subscribe to this scheme and purchase the SGBs. The payment for SGBs can usually be through cash, demand draft, cheque or electronic banking. The tenure of these bonds is 8 years, with the facility to avail the exit option in the 5th, 6th and 7th years, on the interest payment dates.
Gold Exchange Traded Fund (ETF) are passive investment instruments in the form of units representing physical gold, maybe in paper or dematerialized form. One Gold ETF unit is equal to 1 gram of gold and is backed by physical gold of very high purity. Gold ETFs are listed and traded on the NSE and BSE, just like stocks, hence combining the flexibility of stock investment coupled with the simplicity of gold investments. These can be bought and sold continuously in the market at prevalent prices.?
Moreover, Gold ETF¡¯s direct pricing of gold ensures transparency in holding the ETFs, which are represented by 99.5% of pure physical gold bars in most cases. Also, unlike physical gold jewellery, gold ETF can be bought and sold at the same price pan-India, thanks to its digital form.?
Gold funds are a type of mutual funds, in the form of open-ended investments based on the units provided by gold ETFs. In fact, gold funds can be termed as a variant of gold ETFs, with the key difference being that ETFs invest in a range of gold securities, but gold mutual funds do not directly invest in physical gold but take the same position by investing in gold ETFs. Gold funds¡¯? investments are made generally into stocks of gold producing and distributing syndicates, physical gold, or the stocks of mining companies. So, by investing in gold funds, you invest in this asset (gold) without having to purchase it in its physical form.
The primary aim of gold funds is wealth creation by making use of the potential of gold as a commodity. Each gold fund, like other mutual funds, has a fund manager who would take investment decisions as per the objective of the fund. The returns of a gold fund might closely correspond to that of Gold ETFs, and even the NAV (Net asset value) of gold funds may be influenced or even resemble the overall price movement of gold in the market.
Digital gold is a new age investment instrument that allows you to invest in pure 24 karat gold and securely store it in vaults under your ownership. Whenever you wish to take possession of that gold, you can redeem the digital gold for 24 Karat pure gold. To purchase digital gold, all you need to do is enter the amount in rupee or the weight in grams and then buy the gold of a fixed value or weight as per live market rates. You can conveniently pay online through methods like UPI, cards, net banking etc. That's it. Your gold is now stored securely in a vault instantly, and your account can be accessed all time. As far as redeeming it is concerned, you can either take physical delivery of the gold in different forms like coins or bullion or sell it in the digital form itself.? ??
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