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Different Gold Investment Options For Different Financial Goals


Gold is a much bragged off possession of the Indian community but in recent times its appeal has declined due to the government's continuous measures to promote other avenues of investments as well as reduce interest in the precious yellow metal due to ever-burgeoning imports in the metal which burdens government's trade deficit situation.

Different Gold Investment Options For Different Financial Goals

Nonetheless, holding some position in gold is always wise as it is deemed a 'safe haven' amid inflationary concerns and other geo-political tensions or when the domestic currency weakens against dollar. Experts also suggest having some exposure in the shiny metal but as now different investment options or modes are available in the category such as e-gold, SGB scheme, digital gold, Gold ETFs, investor depending on his or her financial goals can bet on the instrument.

SGBs or Sovereign gold bonds can be held with long-term investment perspective: Scheme backed by the sovereign govt is a better alternative to holding physical gold and is available in paper or demat form as units (1gm) of gold. These bonds are available for trading on stock exchanges within a fortnight of issuance. However, the drawback despite the positive of 2.5% p.a interest rate payable half-yearly is its low liquidity.

The bonds can only be redeemed after fifth year of investment on the interest payments date which has a tenure of 8 years. So, in case if you have a long-term perspective and do not wish to redeem your position in SGBs in physical gold you can certainly bet on the highly safe SGB.

Physical gold for personal consumption: With the introduction of GST @ 3% on physical gold, already its sheen among consumers has taken a hit. So, purchase of physical gold should be made only if you intend to use it as in jewellery etc.


Gold ETFs if liquidity is the concern : Gold Exchange Traded Funds (ETFs) combine the flexibility of stock markets with simplicity in gold investment. The product offers an avenue to invest in gold online. The open ended mutual fund scheme invests investors' money in standard gold bullion of 99.5 per cent purity. The option offers high liquidity similar to stocks that are traded on bourses. But when choosing Gold ETF remember to choose the scheme with the lowest expense charges.

Note that market price of Gold ETFs track gold price in the domestic market. Also, you need to remember that neither you own gold nor would you get delivery in physical gold.

Gold bars for accumulating for daughter's marriage: You can consider investment in gold in bar form for the purpose as against jewellery because for the same you would need to incur several other costs such as making charges (10-20%) and storage cost etc. Gold ETFs is also a good way to accumulate your holdings in gold in case you want to buy it for your daughter's marriage

E-gold: Another evolved mode of investing in gold is e-gold that offers better returns in comparison to gold ETFs as the cost of trading in them is nominal. So, investors seeking better returns plus intending to get their units in e-gold held in demat form as physical gold can definitely consider the option. The e-gold channel shall also be a cost-effective way to accumulate for future gold requirement as in case of a marriage.

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