Gold is a precious metal and is of tremendous importance for Indians as it signifies wealth and prosperity, regardless of its form. But gone are the days when gold was only bought from jewellery stores or showrooms in physical form. With today’s ever-changing technology and digital age, one can smartly choose to invest their money into gold funds in its non-physical form.
From paper form to electronic form, gold funds allow you to buy gold with just one click from the comfort of your home – without having to worry about maintenance charges or storing them physically! Wondering about the best ways to invest your hard-earned money into gold funds? Here are four smart options you can consider.
Investing in gold funds is made easy with ETFs or Exchange-Traded Funds. These are paper or dematerialised units representing physical gold. One gold ETF unit represents one gram of gold backed by physical gold of the highest purity.
By going through the mutual fund houses listing ETFs on stock exchanges such as NSE (National Stock Exchange of India) and BSE (Bombay Stock Exchange), you can easily choose and invest in gold ETFs. Moreover, you get the similar convenience of stock investing as you can buy and sell gold ETFs through your brokers or directly via online trading apps at the current market price.
Gold mutual funds
Mutual funds provide an easy and secure way to invest in gold without ever having to open a demat account. Gold mutual funds typically invest in physical gold, gold ETFs and shares of gold mining and distribution companies, which give you exposure to several aspects of the industry.
You can make either a one-time lump sum investment or opt for the SIP (Systematic Investment Plan) route, depending on your goal, and buy or sell shares based on the day’s Net Asset Value (NAV). However, it is important to note that depending on your chosen fund, you may be subject to an exit load if you redeem units before a specified period.
While investing in gold through a mutual fund or ETF is a great option, there is also another route to explore – digital gold. Digital gold gives you an opportunity to invest as little as Re 1 in gold with certified purity of 24k without the hassle of maintaining storage or safety deposits. You can buy and sell fractions of pure gold anytime and from any location and have the freedom to opt for physical delivery of the gold to your doorstep if desired. The return on investments in digital gold is determined by the same market prices that govern physical gold investments.
Sovereign Gold Bonds (SGBs)
One more way to invest in gold funds and get exposure to this market is through sovereign gold bonds. These are issued by the RBI (Reserve Bank of India) and sold in tranches. They can be purchased using banks, stock exchanges, or post offices at the current price (per gram of gold) and offer a fixed interest rate.
At maturity, you will receive the prevailing value of your investment in gold plus the benefit of tax-free redemption. This makes SGBs a great long-term investment opportunity that can help add an extra layer of stability to any portfolio.
From providing a hedge against inflation to tax benefits, gold funds can be a worthwhile addition to your portfolio. With these four smart ways available for you to invest in gold funds, you may choose one over another depending on your risk appetite and financial goals. Remember, it is important to research your options, keep an eye on market dynamics, and regularly review your investments to ensure they still align with your objectives.