How to Invest in Gold?Option of Gold Investment.

 How to Invest in Gold?

If we buy gold in physical form, there is some loss in it, then we should not confuse it in the investment form that we are buying to use it and what are the reasons

First, we get making charges

15:20% of our loss is right there

Second, there comes the problem of storage there, if you keep the storage at home there is a risk of theft if you keep it in the bank, then its cost has to be given.

The third problem comes when we are buying purity from jewelers, so how much adulteration is there that we do not know

Income problem comes there is no income

So what can be optional for gold?

This is how we will discuss five alternative

1.       Physical Gold Investment

2.       Digital Gold

3.       ETF: an exchange-traded fund

4.       Gold Mutual fund

5.       Sovereign-Gold Bond

But, every investment has some pros or cons and has its use

We will see which investment will be right and we will try to identify which is the best from all by comparing risk and reward review.

·         the first the option of physical gold here, we are not talking about jewelry. Contact us of gold biscuits and coins

If you invest in a biscuit or a coin, there is no problem with impurity here because here you invest in 24-carat gold, there is not even a second design and making charges but the storage problem also come here if you keep it in the house. So the risk remains if you keep it in the bank, then there is a cost, then to question it,

Another option has come nowadays.

You must have seen many apps such as Google pe Phoneme, Kuvera, SHCIL, Paytm You can buy gold from the stock exchange.

In how a digital gold works, inside it you can invest in one rupee, In digital gold as much as you have invested, whatever collection they have, they have to buy 50 kg of gold from the 3 company.

1.        MMTC- PAMP.

2.       The second company is Safe Gold,

3.       The third company is Augmont: The Company is the refining and minting company. It stores gold near it inside secure vaults.

You can buy and sell as much as you want within Digital Gold, so the liquidity is very high, you can take delivery even if you want it, but for delivery, you have to invest a minimum point of 5 to 1 gram. You can invest for 5 to 7 years. For example, MMTC gives an option of 5 years. After 5 years, you have to take delivery of it, or you can sell it the sailing price will be the current price at that time.

 There are no storage charges are charged at all, there is no charge inside the MMTC, or it seems very minimal as if there is an investment below 2 grams inside Safe- Gold, after 2 years, 0.05 charges are charged after 2 years.

In digital gold, you can invest up to 50000 comfortably, on top of that, you have to give KYC

 if you invest in Stock Holding Corporation of India Limited, where your minimum investment is hounded and there you Getting KYC done is essential from the beginning.

So let's talk about the investment of gold ETF:

Our ETF is an exchange-traded fund like a mutual the fund operates in the same way it also operates, collects money from the public, does it from the company and puts that money inside the securities and for the EFF.

 If the NIFT has the ETF, then the Nifty puts money within the same weightage as the stock is there. If Debt ETF, then the money invests in government securities. Similarly, there are ETFs of gold. Gold follows the gold index. Gold ETF put money directly in gold mining and Refinery Company and also invest some money from zero to 10% debt securities for their security. But to invest in ETF you must have a Demat account

The fourth option Gold mutual funds: Gold mutual fund invest in ETFs. And if you do not have a Demat account then you can take the option of a gold mutual fund. What does gold mutual fund do differently? If you invest in an ETF, then it can be called Fund of Fund, but if you put money in Gold ETF, then your cost becomes -steady.

The fifth the option of Sovereign-gold-bonds. This is a more secure option from all as RBI issues the sovereign gold bond.

Now we will compile the investment options in detail.

 

If you want to compute returns, then we have to see how much the cost is coming first. Who gets more in some cases, due to which our returns are reduced and our returns depend on the cost.

Cost	Physical Gold	Digital Gold	Gold-ETF	Gold Mutual Fund	Sovereign Gold Bond
GST	3%	3%	-	-	-
Storage, Transaction Delivery	-	2-3%	-	-	-
Expense ratio	-	-	0.5-1%	0.5-1..5% +0.5-1.)%(ETF)	-
Exit Load	-	-	-	1-2% (< 1 year)	-
Brokerage, DP, STT, etc	-	-	Negligible (Zerodha/Upstox)	0 (Zerodha/Upstox)	0 (Zerodha/Upstox)
Returns	40%	40%	40%	40%	40%
Additional	-	-	-	-	2.5-3%
Effective Return	37%	35%	35%	30%	52.5%

 

If Physical has to talk about Gold at 3:00% GST, even inside Digital Gold, you have to pay three% GST and there is no GST inside EPF and sovereign-gold bond

The transaction and delivery charges in Physical Gold form It does not have, but when you go to invest in digital gold it takes two to three percent because if you convert it into a coin then you will incur some making charges, other than that there may be storage or transaction charge and if you deliver it together then Can also be charged, we can say two to three percent. Gold ETFs cannot be recharged within Gold Mutual Funds and the sovereign-gold bonds,

 if you talk about the expense ratio, there are no additional expenses in physical gold and digital gold  But because someone has to manage the fund inside the ETF, it will charge management fees. It ranges from 0.5 to 1%.

 For Gold Mutual Funds. It is charging 0.5 to 1.5% Management Fee. It takes place here because it invests inside ETFs and additionally here. The fees are charged twice. Taking the management fees of ETFs as well, the fee of 1% is looking extra, so what can the average hold? Two percent will be charged. Gold bonds do not incur any fees

Consider the exit load, then it is just for gold mutual funds. if you withdraw money before 1 year, then there is a load from 1:00 to 2:00, there is no exit load inside the gold bond.

 Now about DP Charges STT etc. It can be for gold ETF. Because if you buy from a broker, there is no charge if you buy a direct mutual fund inside a gold mutual fund. If you buy a gold bond, then there is no charge in it

If the returns are calculated then let us assume an 8% increase in the year. From the investment year, then in 5 years, the price by simple calculation has gone up by 40%, according to this we have got 40% returns. You will have to add inside the sovereign gold bond. Here we get an additional 2:50 to 3:00% annual interest which gives you by RBI then if we calculate then it will, not 2 .5%. It will be 2:50 * 5% equal to 12.5%.

 If we compute returns, then 37% returns physically gold form.

in digital gold Within 35%

An ETF, 35% percent

For computing returns on Gold Mutual Fund, it will come around 30% as  1%  management fees for f Mutual Fund, 1% is going to ETF, then for 5 years, it will be 10%,  so 10% out of 40% So your effective returns have come in 30% of the gold mutual fund.

For sovereign-gold bond, there is no cost in any way, plus here you get annual interest. So for 5 years, it will get an additional 12.5 percent returns here so it comes around at 52.5%. If it is good to invest in bonds,

 

Is it better to invest in bonds?

Let us compare the rest of the factors also.

Other Factors	Physical Gold	Digital Gold	Gold-ETF	Gold Mutual Fund	Sovereign Gold Bond
SIP	No	Yes	No	Yes	No
Liquidity	High	High	Moderate	High	Moderate
Minimum Investment	0.5-1 gm	Rs. 1/-	1 Gm	Rs-500/-	1 Gm
Delivery	Yes	Min 0.5-1.0 Gm	Min 1.0 Kg	No	No
Loan	< 50g coin	No	No	No	yes
How to invest?	Dealer, Bank, Jeweler	Paytm, Gpay Phonepay, Kuvera SHCIL NSEL. MMTC-PAMP, Safe-Gold Augmont	Demat Account Zerodha Upstox & other brokers	Zerodha Groww Paytm Kuvera	Bank Post-office SHCIL Demat(secondary-Market)

 SIP: In physical Gold there is no option of SIP. but you can do it in digital gold, you do not get this option even inside Gold ETFs. This option is available in Gold Mutual Fund. There is no option inside the bond. You can invest in sovereign gold bonds only RBI declares the issue.

Liquidity, you can give it comfortably in physical gold, so here liquidity is high.

 There is also the liquidity of digital gold because through the app, you can sell comfortably,

 Liquidity in gold-ETF is moderate. In ETFs why it is not so popular in India, It is popular in the western country. It is not well marketed.

In gold mutual funds, can you easily sell gold? So here also liquidity is high.

In sovereign gold-bond, then liquidity is moderate here because the transaction volume of gold is not so high here.

Minimum investment, physical gold, you can take minimum point 5 or 1 gram in old,

In digital gold, you can start with one rupee,

in the case of ETF, you should get an investment value of a minimum of 1 gram cost.

It is a gold mutual fund you can start from ₹ 500,

Even inside the sovereign gold bond, now you have to start with a minimum of 1 gram.

Delivery, you have to take delivery in physical gold

In digital gold, you get a minimum of 0.5 to 1 gram delivery.

An ETF, you have to take delivery of the minimum 1kg and 1kg is a very large amount of gold

If we talk about the gold mutual funds of  then delivery is not possible

In sovereign gold bond delivery is not possible.

Loan: You can take a loan against coin but it should be below 50 gm in physical gold. There is an RBI guideline for that and it is only in the form of a biscuit.

You cannot take a loan on it even inside digital gold.

 You cannot take a load even within ETFs and mutual funds.

You cannot take a loan in a gold mutual fund.

But within the sovereign gold bond, you can take it.

How do we buy it

Physical gold: From Gold dealers buy through the bank

Digital Gold: through the App.

Gold ETFs have to buy a Demat account.

A mutual fund can be bought through mutual fund apps.

Sovereign gold bond: You have to buy gold bonds. Only when RBI issue id declared you can buy t it through the bank through the post office, you can buy from the stock holding corporation

In the secondary market, you can buy them through the stock market. If you have bought in between them, you can now take the through of your Demat account.

Conclusion: Considering the above factors you can invest in the option which is suitable for you.