Gold is to India what Football is to Germany. Too many sentiments, life goals and memories attached to it.
A lot has been said about how an equity investment is better than investment in gold and when it comes to the rate of return, perhaps it is.
But let us not de-value what comes naturally to us and makes us happy. You may decide to choose gold over equity for the same reason as you may decide to go for a debt fund over equity- it makes you feel safe and comfortable.
It is about the psyche.
Having said the above, doesn’t physical gold feel cumbersome to you? There is always a possibility of theft/loss. Not to mention the logistics and going through the entire process of buy gold draws a hole in your pocket!
To counter these, there exists paper and paper-less Gold. These are mutual funds designed around our favourite metal to provide us with the convenience of not carrying around this valuable asset.
We have elaborated three different ways through which you can buy gold in India
Gold Exchange Traded Funds are the closest to buying physical gold. These are open-ended exchange-traded funds that invest in 99.5% pure gold.
Daily prices are tracked by the fund managers and they trade gold ETF units in the stock exchange. You may think of it as buying paper gold. You will be required to have a demat account to start off with an eGold ETFs.
Why choose gold ETF?
Gold funds are mutual fund schemes that invest in Gold ETFs and other related assets. They do not need you to have a demat account.
These funds are not linked directly to physical gold and hence the NAVs for a Gold ETF and a Gold Fund will be different, although closely linked.
Funds like ICICI Regular Gold Savings Fund, have a minimum SIP of Rs.1000 and the exit load of which is 2%, if redeemed from 0 to 15 months.
If you are looking for a safer form of gold investment, then the Government Gold Bonds are your ideal choice.
They come under the debt fund category and are more suitable for investors who are looking at gold purely as a form of investment and not to use/convert it to its physical form.
These bonds come under the purview of RBI and can be invested through any SEBI authorized agent or even directly at scheduled/nationalised banks and post offices.
SGBs are Government securities and their values is denominated in multiples of gold grams. The bond’s maturity tenure is 8 years. However, you may choose to withdraw it from the 5th year onwards.
So there. A whole new world of gold investments completely free of the hassles associated with physical gold. In most of these options, by ruling our intermediaries you make it a very convenient investment.
This festive season while we are busy renewing the basics of our lives from homes to furniture to electronics or even relationships; let us make some time for renewing our ways of investment too!