The yellow metal has been luring Indians since time immemorial. With an annual consumption of about 700 tones, India is the world’s largest consumer of gold and the country consumes about one-sixth of the world’s total consumption of gold, if figures are anything to go by.
Gold has traditionally been seen as a hedge against inflation and has always enjoyed immense popularity as it is considered to be a safe investment haven that assures guaranteed returns when all other asset classes fail to perform.
From averaging at just about Rs. 63.25 in the year 1964 to a whopping Rs. 28,623.50 in 2016, gold rate in India has nearly always seen an upwards swing. As of today, pure 24K gold in the state of Gujarat is priced at Rs. 29, 990 per 10 grams.
However, of late, many Indians are having second thoughts about keeping physical gold in their bank’s lockers and have begun to question if this really is an ideal way to invest in gold. With a lot of alternative ways available, you can now invest in the yellow metal, in schemes that offer significantly better returns than investing in physical gold. Listed below are some of them:
1.Invest in Gold ETFs
If you want to invest in Gold electronically, this is perhaps one of the best ways. Gold Exchange Traded Fund (ETF) allows you to invest in gold without buying it in its physical form. The fund value moves up and down as per the price of gold.
Investing in Gold ETFs is as good as investing in gold with the only difference being you are not in possession of gold in its physical form.
An important point to consider is since Gold ETFs are traded in market just like other stocks, these are managed by dedicated fund managers and there is a brokerage cost and management cost involved. This reduces your gains but you save money on locker rent which banks would otherwise charge if you use their lockers to store physical gold.
- Sovereign Gold Bonds
Indian Government introduced Sovereign Gold Bonds in order to reduce the demand for physical gold and prompt Indians to invest in gold electronically, with the aim of benefiting the fiscal deficit of India.
The fact that investors receive an interest coupon of 2.5% per annum makes investing in Sovereign Gold Bonds very lucrative. These bonds come with a lock-in period of five years. The principal amount that is payable to investors after this lock-in period is over is decided based on gold’s price prevailing at that time.
Just like regular stocks, Sovereign Gold Bonds are listed on stock exchanges, enabling investors to freely trade in them. Individual investors can rejoice as investments in these bonds are tax free. Cost and risk of storing gold in physical form is also eliminated. Wanted dig deep about gold investmentbefore investing in gold, you can visit moneyvisual.com to know more about gold investment options.
- Gold Funds of Funds
This method of gold investment involves investment in multiple ETFs. Investors can then buy these funds and invest in Gold ETFs indirectly.
You need not be in possession of a Demat account in order to invest in Gold Funds of Funds. However, you would need to pay a fee to the Fund Manager for managing your portfolio. You may either invest in one go or choose to make use of trusted Systematic Investment Plans, just like other mutual funds.
- Gold Futures
Gold Futures is very similar to other commodity futures. It tracks the spot price of gold. These futures are freely traded on commodity exchanges. However, only investors who have a high appetite for risk and those who are highly experienced should invest in Gold Futures.
Since it is a high-risk investment, Gold Futures have the capability of giving investors extremely high returns. But they can also erode investor wealth in times of uncertainty in markets.
- Invest in e-Gold
Investing in e-gold allows you to buy gold in its Demat form and the Demat certificate that you receive can be exchanged for physical gold at any time. National Spot Exchange Limited offers this investment option in India at present.
You can either sell e-gold or ask for physical delivery of gold. And since there is no yearly management fees as in case of Gold ETFs, over the longer term, investing in e-gold gives higher returns and may turn out to be a more lucrative form of investment.
The methods mentioned above are slowly paving the way for other lucrative methods of investing in the yellow metal. Whether you’re investing in physical gold or buying gold electronically, you shouldn’t be investing more than 5-10% of your overall investment in gold. Invest wisely and see your money grow.