Buying gold on Diwali is a common tradition in India. Purchasing this precious metal is believed to bring prosperity, wealth and good luck in our homes. Therefore, despite high gold prices prevailing during the festive season, we all buy it on this auspicious day. If you are bored of buying gold in a traditional way, i.e., in the form of gold coins and gold jewellery, then here are a few options for you to consider:
Various Gold Buying Options You Can Consider this Diwali
We have already established that buying gold on Diwali is important for Indians. Due to traditional old practices, most people, on this auspicious day, buy gold jewellery or gold coins, either of which does not prove to be an ideal gold-investment option. If you want to keep up with the tradition of buying gold on Diwali while making a good profit, these are the options that you must consider:
- Digital Gold: It is a new gold investment option that allows you to buy and sell 24K gold online at live market prices. Once the gold is accumulated in your digital gold account, you can even get it delivered at your doorstep in the form of 24K gold coins. The investment option is fast gaining popularity due to its high ’flexibility’ and ‘affordability’. By flexibility we mean that you can anytime buy, sell and get your accumulated gold home-delivered. By affordability we mean that unlike physical gold you can buy Digital Gold in fractions at a substantially low cost. Paisabazaar.com in partnership with SafeGold offers Digital Gold starting at Rs. 100. Investing in Digital Gold at Paisabazaar.com is simple and absolutely safe as the amount of gold you buy on the platform is backed by an equivalent amount of physical gold, which is safely stored in an insured vault. Besides allowing customers to buy, sell and get delivery, it lets people to save regularly in Digital Gold through Gold Savings Plan. As per your wish you can start, stop and reset your plan anytime. You can even liquidate your savings as per will without worrying about the lock-in period as it does not has any.
- Gold Sovereign Bond (GSB): These are yet another option for holding physical gold. Sovereign Gold Bonds are basically government security gold bonds that are backed by physical gold. Since they are issued by the Reserve Bank of India ‘RBI’ on behalf of the Government of India, therefore, they are safe to invest in. They also carry sovereign guarantee on both the money invested and the interest accrued on the bonds. Moreover, the returns earned on it are linked to the current gold rates; hence, the scheme offers same benefits as the physical gold. Just like physical gold they can be easily used as collateral for loans (as in gold loan) and can be sold or traded on stock exchanges like NSE and BSE. The tenure of the scheme is from 5 to 7 years during which the units can be liquidated anytime. Last but not the least, in this scheme, the tax treatment is the same as for physical gold for an investor.
- Gold Exchange Traded Funds (Gold ETFs): It is a paperless gold investment option in which money is collected from interested investors and is invested, primarily, in gold-producing companies or gold bullion. They track the domestic gold rates and represent gold in a demateralised form. Gold ETFs are listed on stock exchanges, i.e., NSE (National Stock Exchange) and BSE (Bombay Stock Exchange) and thus can be bought and sold easily through your stock broker. But to do so you also need a demat account. Since it is a dematerialized form of investment, it is free from the usual concerns such as purity, storage risk, etc.
- Gold Funds: Gold funds are open-ended funds that invest in gold ETFs. This is also the reason why they are also referred as Funds of Funds (FoF). In gold funds, you can invest any amount at any time. The process of investing in gold funds is easier than investing in gold ETFs as it does not require a demat account. Unlike gold ETFs, gold funds also allow you to invest through SIP (Systematic Investment Planning) rather than making a lumpsum investment. Like gold ETFs, gold funds also closely relate and track the actual price of gold.
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Which Gold Investment Option Should You Choose?
Investing in gold gives you an opportunity to get benefit in the long run of the healthy appetite that is present in the global market. Gold, if present in your investment portfolio can safeguard against market fluctuations, inflation and currency devaluation. You can count on gold to be helpful to you during your trying times as you can liquidate the metal anytime. The ways to invest in gold are many and each has its own risks and rewards. Which gold investment option should you choose depends on what you expect of it. The purpose behind you buying gold can help you make the right choice. If you are buying gold for wedding or for flaunting it, then gold jewellery is apt. But if you are looking for investment purpose can go for gold mutual funds or gold ETFs as it does not include making charges and storage risks as it does in physical gold. And if you wish for the best of both worlds then go for Digital Gold. You can buy it at live market prices without bearing any storage and making charges. You can also get it delivered at your doorstep in the form of 24 karat gold coins in a tampered proof packaging. Gold Savings Plan is yet another gold-savings option that you get with Digital Gold. It is like gold SIP wherein you invest a fixed amount every month in gold. You can start, stop and change the plan anytime you want. Another plus about the plan is that you can withdraw the accumulate amount anytime as it has no lock-in period.