Know The Important Ways To Invest In Gold This Year
Gold is among the most preferred investments in this country. High inflation and liquidity, beating the capacity are among some of its strong selling points, not to state about the prestige, charm, and the others. The value of gold shoots up when the market encounters turbulence. Even though gold also faces a fall in its price, it still remains one of the most traditional and a secure investment option. With that, let us discuss the best ways to invest in gold in India to get the best results. Also if you are wondering how to invest in gold in share market, this article will give you some ideas.
Why Should You Invest In Gold?
Let us start with this guide on how to invest in gold for beginners. Safety, returns, and liquidity are the three parameters most risk-averse investors look for before they plan to invest. While gold caters to the first two criteria without any hiccups, it does not perform poorly at the last one as well. Here are the reasons on why you should invest in gold:
- Investing in gold is worthwhile as it is an inflation-beating investment. With time, the return on various gold investments has been in line with the rate of inflation.
- Gold shares an inverse relation with equity investments. For instance, if the equity markets begin to go down, gold would act well. Considering gold as an investment choice in your investment portfolio will be a shield against the overall fluctuations of your portfolio.
How to Invest in Gold?
The ‘golden question’ here is how does one make investments in gold? Traditionally, it was by purchasing physical gold in the form of bullions, coins, artifacts, or jewelry. However, there are the latest forms of gold investments these days, like gold ETFs (exchange-traded funds) and also the gold mutual funds.
Gold ETFs are similar to purchasing an equivalent sum of physical gold but without the tension of having to store the physical gold. Hence, there is no risk of burglary or theft as the gold is kept in Demat (paper) form. Gold funds include investing in gold mining entities as well. Gold ETFs are the cheapest way to invest in gold.
Let us evaluate the varied ways to invest in gold from the following table:
Gold |
Gold ETFs (Exchange Traded Funds) |
Gold Funds |
|---|---|---|
|
Investment in physical gold
|
The investor buys a proportionate value of gold but not in the physical form
|
The investment is made in bullion and companies involved in mining gold
|
|
No need for a Demat account
|
The investor needs a Demat account
|
No need for a Demat account to invest
|
|
Market fluctuations directly affect the prices of gold
|
Changes in the gold prices affect that of gold ETFs
|
Changes in the gold prices don’t affect gold funds directly
|
|
No additional charges other than the physical gold itself
|
Gold ETFs involve asset management and brokerage fees
|
There’s a minimum charge to manage the gold funds.
|
|
Risks of theft and burglary associated with storing physical gold
|
Gold ETFs remove the burden of trading gold in the physical form
|
Eliminates the risk of theft/burglary and buffers investments to changing market fluctuations
|
Other Modes To Invest In Gold
Even though the above mentioned ways are the ideal ways for you to invest in gold, there are several other ways as well that can be used as an avenue to make investments in gold. Without further delay, let us have a look at the other ways by which you can make investments in gold.
1. Investment in Solid Gold
Investment can be created with a cliché process of changing money in solid gold products such as gold biscuits, coins, or bars. This purest form of buying includes the minimal risk of the forgery but a high risk of storage or theft.
2. Gold Schemes
Normally, jewelers arrive with a lot of gold schemes from time to time for their valued users. An investor has to invest a particular amount in the gold scheme, just like a SIP, for a particular span of time. After maturity, an investor will receive a lump sum amount in hand for which they can buy the gold.
3. Digital Gold
In the latest development, digital gold has received a lot of fame in the financial marketplace. Fintech platforms offer the choice of purchasing and selling gold just like any other virtual transaction. Here you can invest in gold online. Investors should remember that digital gold is not provided on all channels and one should evaluate the market carefully prior to investing to avoid forgery.
4. Sovereign Gold Bonds
Managed by the Reserve Bank of India, Sovereign Gold Bonds were offered by the Government of India in the year 2015. The aim behind releasing it is to provide an alternative choice for investment in solid gold. Usually arrives with a 5-year lock-in period, Sovereign Gold Bonds can be redeemed in cash in the future.
Things To Consider Before Your Invest In Gold
Here is a point wise list of why an investor should choose for investing in gold rather than any other investment choices:
- Safety: It is very secure to invest in gold as it is among the oldest forms of investment that has the ability to beat inflation.
- Liquidity: There is no problem with liquidity when it is to invest in gold. That gold can be redeemed in cash anytime an investor wants to.
- Returns: Look at the history of the inflation-beating rate of gold. Whatever the condition of the market is, gold has always seen an increase over the passing years.
- Inversely related to Equity: Whenever the equity market decreases, the rate of gold increases. The gold investment enhances the overall portfolio of the investor. So if you are wondering is it safe to invest in gold now, see the share market and decide.
Closing Lines
Every form of investment arrives with its advantages and disadvantages. You can invest in gold but that should be made carefully considering all the market scenarios that you can face. In the above article, we have discussed the various ways in which you can make an investment in gold and earn good returns. So to answer your question of is it good to invest in gold in 2022, yes you can but at your own risk. Do a good amount of research on gold investments before you actually do that.
