It’s natural and even prudent for an investor to wonder if Gold is a good investment or not. Gold is a unique asset: highly liquid, yet scarce; it’s a luxury good as much as an investment. Gold is no one’s liability and carries no counterparty risk. Some points to consider for investing in Gold:

The combination of these factors means that adding gold to a portfolio can enhance risk-adjusted returns.

Portfolio allocation analysis indicates that investors who hold 5% to 10% of their portfolio in gold can significantly improve performance.

Ways to invest in gold

The following are the options in which you can invest in gold in India.

1. Physical Gold :
   1. Advantages
      • Emotional booster.
      • Easy to get Loan against Gold
   2. Disadvantages
      • Risk of theft.
      • A high entry barrier as there is a minimum amount involved.
      • Cost of storage, and
      • Making charges
   3. You can buy physical gold in the form of
      • Jewellery
      • Bars and coins
2. Digital/Online Gold:
   1. Advantages
      • No bank locker/any other storage costs.
      • No security issues.
      • No anxiety about purity. Assured purity in gold – 999/995 LBMA approved.
      • Lowest minimum amount.
      • Highly liquid.
   2. Disadvantages
      • There is process to convert to physical gold
      • No-loan against such gold holdings
   3. You can buy Digital/Online Gold in the ways as follows:
      1. Digital gold
         • The issuing company issues a holding certificate in your name.
         • You don’t get physical possession.
         • You can exchange it for physical gold anytime.
         • No minimum investment
         • One of the most trusted names is MMTC
      2. Gold ETF
         • Traded like a stock on the stock exchange.
         • You need a Demat account to invest in an ETF.
         • You pay small brokerage charges, depending on your broker.
         • The ETF price includes an AMC fee, depending on the AMC.
         • It gives the option of smallest minimum investment amount – 1/10th of a gram.
      3. Gold mutual funds
         • One of the biggest advantages is that you get the option to create an automated SIP
         • The minimum amount is very low.
         • The UNIT price includes an AMC fee, depending on the AMC.
      4. Gold sovereign bond
         • Issued by RBI.
         • In addition to the potential increase in price of gold, you get an interest of 2.5% per annum.
         • You can purchase a minimum of 1g gold, and a maximum of 4kg
         • The tenor of the scheme is 8 years, with exit options starting after 5 years.
         • You can invest in a SGB from few banks or from your de-mat account.
         • Approximately 2 weeks after launch, these SGBs start trading on NSE/BSE.
         • Then, you can trade like any other stocks or ETFs.
      5. Gold monetisation scheme
         • Not a way to purchase gold.
         • It is a government scheme that allows you to earn interest on gold already owned by you.
         • You have to deposit a minimum of 30g.
         • You earn an interest between 2 and 2.5% depending on your tenure.
         • The tenure can be between 3 and 12 years long.
      6. Gold Petal on commodity exchanges
         • You can buy a Future contract and convert to delivery at an opportune moment.
         • Physical delivery available in multiples of 8 grams.
         • Delivery possible in demat or physical form.
         • You can trade like any other stocks or commodity on exchanges.