When you hear other people talking about investing in gold, you might think to yourself “how to invest in gold?”. Naturally, for a country known for gold every Indian somewhere wishes to have it. More than an investment, having gold is a feeling, an achievement, a luxury. With ever-rising gold prices, you also wish to use the opportunity.
We’ve tried to curate all the information you need to invest in gold in one place.
As a beginner, before you think about how to invest in gold, you might be concerned about the benefits of investing in gold. In fact, you might think about whether there are benefits or not. Below are six practical reasons to invest in gold.
Gold is used around the world as a piece of heritage and has great significance in many cultures. Be it gold as currency or an ornament passed through generations, gold has not lost its significance.
The price of gold has shown significant growth, which proves as a great hedge against investment. Even when the gold is lying with you, it will have an increment in price that is higher than the inflation rate.
Deflation is a situation when the entire economy is slowed down. The history of gold during deflation shows an increment in its pricing even when the business operations and spending were low.
Even in situations of geopolitical uncertainty, gold is carried by people when they flee. As gold can be used in almost all places to get cash, this is not just an investment, but a future safety.
One of the benefits of buying gold comes from its natural metal status - everything that has limited supply will see prices soar if the demand gets higher.
Now that you know why you should invest in gold, let’s jump to how you can invest in gold and what options you have.
Investing in physical gold is a smart choice, done by many people for ages. Here are the options-
Indians take pride in having gold jewelry. The gold bought in jewelry form has made charges added to its cost. This means that the amount you will invest will have an extra amount that you may or may not be able to recover.
Advice: As a beginner, it is suggested that you avoid investing in jewelry. It is not usually bought for investment purposes, rather is actually bought as a long-term asset.
You can buy gold jewelry at various local and branded jewelry outlets. Ensure that you are seeing the hallmark and the purity level of gold.
Another way to invest in gold is to buy gold coins. There are gold coins available in various weights that can be bought by anyone. You can find gold coins for as low as 1gm. So if you only have a limited amount to invest, it's a great choice.
Advice: As a beginner, you can easily invest in gold coins as you don't need much investment value, and can easily store them due to size advantage. You can buy gold coins from any local or brand-level store, bank, NBFC, and other institutions.
Many gold sellers have a savings scheme where they ask you to deposit some money every month. At the end of a certain time, you can buy gold worth your investment plus some additional amount they add (as you’ve invested in them for a long time). Through this scheme, people can easily invest small amounts and get gold.
Advice: Check out such schemes of reputed sellers as many small-level sellers can defraud people, and run after taking their money. If your investment plan is suitable as per the scheme, you can easily invest in it. If you are investing more than 2 lakhs, you will need a PAN card.
If you don't want to invest in physical gold due to its storage and protection issues, you can invest in the equity of top gold miner organizations. This will ensure that you are invested in a space that has the possibility of good returns, and yet you don't have to take care of physical gold.
Advice: Be smart when you choose to invest in the share market. Invest if your plan is long-term, and only in reputed spaces. You will need a Demat account to start your share market investment.
One of the most common and recent types of gold investment is investing in gold online - digital gold. Many reputed gold traders help you begin your gold investment journey with a small amount. Every time you pay, a certain amount of gold is added to your account). This gold can be converted into physical gold and even delivered to your home.
Advice: For beginners who don't want physical gold and yet wish to invest directly in gold- this is a great choice. Instead of storing, you have a form storing it for you and you can easily trade this. Check out the websites of top sellers and check their process to buy it.
Gold exchange-traded funds are basically investing in the BSE/NSE with gold as an underlying asset. The amount at which these are traded is very close to the original gold live rate, making it a great investment plan. People can easily invest in a certain gold ETF or do a SIP to plan the investment amount monthly.
Advice: If you plan to invest in gold this way, you need a Demat account, a brokerage firm, and some background knowledge. As a beginner, you can avoid it until you understand how the market works to earn a return on your investment.
It is paper gold that is usually issued by the government. These may not be readily available, as in between certain months (usually 2-3 months) the window opens for fresh investment. You can buy it other than this, but that will be buying previous issues at market price.
Advice: If you get your hand at GB, do not miss it. You need a varied portfolio of investments and GBs are secure. For investing in any GB you need KYC documentation. But remember, they have a lock-in period, and thus are not liquid instruments.
We hope we’ve cleared your doubt about how to invest in gold as a beginner. Choose wisely, Choose smart!
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