Gold has been a symbol of wealth and prosperity for centuries. Its ability to retain value and act as a hedge against inflation makes it an attractive investment. During economic uncertainties, gold often outperforms other assets. Over the past decade, gold has given an annualised returns of about 9% (in INR terms as of June 30, 2024). Additionally, the high liquidity of gold allows you to quickly convert your holding into cash.
Types of gold investment plans
Physical gold
Purchasing gold coins and bars is a traditional and straightforward way to invest in gold. The main advantage is having physical possession of the gold, but it requires secure storage. This type of investment is suitable for conservative investors who prefer a tangible asset, long-term holders looking for a store of value, and those seeking to diversify their portfolio with a stable asset.
Digital Gold
Digital Gold is a modern and convenient way to own gold without the hassle of physical storage. You can buy Digital Gold online through Axis Bank.
The gold is stored in secure vaults, reducing the risk associated with physical storage. This method offers flexibility, allowing you to start with small investments and gradually increase your holdings. Digital Gold can be easily bought and sold, providing high liquidity.
Digital gold is suitable for tech-savvy investors comfortable with online transactions, small and medium investors who prefer to start small, and those looking for a hassle-free investment option.
Sovereign Gold Bonds (SGBs)
Sovereign Gold Bonds are government securities denominated in grams of gold. SGBs provide an annual interest of 2.5% on the initial investment amount, along with capital appreciation based on the market price of gold.
SGBs eliminate the need for physical storage as they are issued in paper or dematerialised form. Historically, SGBs have provided attractive returns, considering both interest and capital appreciation.
This investment option is suitable for long-term investors looking for a safe investment, tax-savvy individuals seeking tax benefits, and risk-averse investors preferring government-backed securities.
Gold ETFs and Gold Funds
Mutual funds offer two ways to invest in gold: Gold ETFs and Gold Funds. Gold ETFs invest directly in gold and are traded on stock exchanges, providing transparent pricing linked to current gold prices and ease of trading, similar to shares. To invest in Gold ETFs, a demat and trading account are required. If you don’t have these accounts, Gold Funds are a suitable alternative. Gold Funds are essentially funds of funds that invest in units of Gold ETFs. Both options are better than physical gold. While Gold ETFs generally have a lower expense ratio than Gold Funds, Gold Funds offer the advantage of SIP investments, which is not possible with Gold ETFs.
Also Read: What is SGB: Meaning, features & benefits
Conclusion
Gold investment plans offer a range of options to suit different investor needs. Whether you prefer the traditional approach of physical gold, the modern convenience of Digital Gold, or the security of government-backed bonds, there is a plan for you. By understanding the different types of gold saving schemes, you can make an informed decision that aligns with your financial objectives.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
Mutual Fund investments are subject to market risk, read all scheme related documents carefully. Axis Bank Ltd is acting as an AMFI registered MF Distributor (ARN code: ARN-0019). Purchase of Mutual Funds by Axis Bank’s customer is purely voluntary and not linked to availment of any other facility from the Bank. T&C apply.
