Gold prices are near historic highs in most Indian cities. Whether it would be higher from here on is difficult to predict. However, gold is an excellent hedge against risks, which is why it should be a part of every portfolio. Here are 4 best ways to invest in gold:
Gold savings schemes of jewellers
Some of the gold saving scheme from jewellers are also a good bet, if you want to build a corpus to buy jewellery at a later stage.
However, here the schemes differ from jeweller to jeweller. Some of them have schemes for 10 months, while some other for 12 and 13 months. You need to invest a small sum each month. At the end of the term some jewellers pay for one installment, while some other jewelers give a discount as well. This is meant for those looking at buying jewellery for marriage or any other event.
This is more of a short term mechanism of 1 year to save money through investing in gold.
If you are investing in physical gold, do not do through ornaments and jewellery. The best way to invest in gold is through coins. This is because jewllery would have making and breaking charges, while coins would not. However, this for small investors who want to accumulate for a marriage or for a particular ceremony. You should not be stashing large amounts of gold coins in your home.
If you invest though this mechanism, you would have to also place the coins in a bank, so you have to factor those costs as well. On the other hand, keeping it at home is always a risky proposition, because of the possibility of theft. So, through gold coins, you can invest only in a limited way.
Gold Futures are traded on the MCX and is very different from buying physical gold. You need to open an account through a broker, who is a member of the MCX. Gold Futures operate in the same way as stock and currency futures.
Gold Futures are traded at different prices and different forms. Gold Futures for Aug settlement, Gold Futures for Sept, October and so on.
The brokerage and other charges are almost the same as for stock futures. Gold Futures will track gold rates and is a good form of taking large exposures, with very little money. Typically, you can seek complete guidance from a broker on how to invest in gold futures. However, since exposure is high with even small amounts, one needs to be careful.
Gold ETFs is buying gold in the electronic form, which eliminates the risk of theft and also worries over storage. Since Gold ETFs track the prices of gold, you are not missing out on gold.
For buying Gold ETFs you would need to be KYC compliant and complete your address proof, identity proof etc.
To invest in gold ETFs, you would have to do so, though the manner in which you invest in stocks. You need to have a demat account and a trading account, just like you do for equity shares. Brokerages and charges are also low, which is a big positive.