How to Invest in Paper Gold in India
has always been a preferred investment option for Indians. It is a highly
liquid asset and has the potential to generate good returns in the long term.
However, holding gold in physical form has many drawbacks. The safety of
holding gold in physical form is one of the main concerns. To overcome the
risks of holding gold physically, you may invest in paper gold in India.
Different Ways to Invest in Paper Gold in
Electronic Traded Funds (ETFs)
the ways on investing in paper gold is through Gold ETFs. Purchasing Gold ETFs
units is similar to purchasing stocks on the stock exchange. These units are
available at the current market price of gold. These units can be traded on the
commodity exchange. You can purchase these ETF units through lump sum
investment or via SIP at regular intervals.
Gold Bonds (SGBs)
are planning to purchase paper gold you can invest in Sovereign Gold Bonds (SGBs).
These bonds are issued by the Reserve Bank of India and they come with a
sovereign guarantee. An individual can purchase these bonds when the window
opens for a particular time interval. The window for the purchase of SGBs
usually opens once in 2-3 months. If an individual wishes to buy SGBs outside
this window, they may purchase them from the secondary market.
the ways to purchase paper gold is by investing in gold mutual funds. These
funds invest in gold ETFs and are managed by professional fund managers. This
investment will help you in diversifying your portfolio and reduce the overall
can now make an online purchase of gold coins, jewellery or bars. The process
of buying gold online is similar to buying physical gold. The purchase made by
you will be stored in a digital locker that you can access anytime using
digital platforms. You can buy or sell gold digitally using those platforms.
Digital gold makes gold accessible and solves the problem of physical storage.
above mentioned are some of the ways through which you may invest in paper gold
in India. Before investing in any of the options, one must think carefully. For
example, SGBs are useful for long-term investors, while Gold ETFs offer better
liquidity in comparison to SGBs.
more important criterion that investors must consider while investing in gold
is taxation on gains. For example, gains made from SGBs are exempt from
taxation in case of redemption, but in Gold ETFs, the long-term capital gain is
applicable at the rate of 20% after indexation. Therefore, make your gold
investment decisions wisely and after considering various investment goals.