7 Ways to Invest Gold Wisely in 2021

Invest Gold Wisely in 2021

Humans have turned to gold as an investment and a store of wealth for centuries. Gold was used as a currency and a symbol of prosperity and authority throughout history. Many people invest today in gold due to its consistency and desirability throughout time.

Given the current gold price, investing in it is both inexpensive and wise. There are various strong reasons to invest in gold. If investing in gold is on your mind today, this article will guide you through 7 guaranteed ways to help you decide what will help you in deciding.

1. Jewellery as an Investment

Physical gold is also one of the finest ways to invest because it can be easily redeemed in the market. In case of an emergency, you can also take out a loan against your gold jewellery. Buying physical gold in the form of exquisite jewellery such as earrings, necklaces, finger rings, chains, and so on is one of the simplest ways to invest today in gold.

If you opt to invest in physical gold, buy it from a reputable jeweller who can provide a guarantee certificate. When you buy from reputable suppliers, you can rest assured that you are getting authentic quality with a hallmark, you'll also get accurate receipts for future reference, as well as a buyback policy that guarantees you 100% of the value of your gold, perhaps more, based on the current market price.

While considering gold as an investment sounds exciting, you'll also need a safe place to keep it. One popular method is to purchase a safe as keeping gold at home can be problematic, especially if someone learns you keep gold at home, which could lead to theft. As a result, the next best choice is to keep your gold in a gold storage firm or a bank locker for a nominal annual fee.

2. Gold Bars and Coins

When purchasing gold jewellery, you may be subject to manufacturing charges, which are the costs of changing raw gold into a beautiful piece of jewellery. Many investors prefer gold coins or bars to avoid the ‘making charges' that apply to gold jewellery as the making charges are not relevant because these coins/bars do not require professional artistry. Hence, a better option to invest today in gold is to buy gold bars and gold coins.

The essential characteristic of small gold bars and gold coins is that they are available in a variety of sizes ranging from 0.5 grams to 100 grams, making them affordable for everybody to buy.

Gold coins are global, and because of their size, they may be traded quickly without having to wait for a buyer. Due to their transparency, it is simple to assess their worth and returns. Gold coins are pure gold with no hidden or additional charges. With their superior security and anti-counterfeit features, there is absolutely no risk of fake gold, as each coin in India comes with a unique serial number and barcode.

3. ETFs (Gold Exchange Traded Funds)

Are you thinking of buying gold as an investment but afraid of physically holding the metal? You can invest in one of the Exchange Traded Funds that follow gold's value.

A gold ETF is a substitute for physical gold. They allow you to maintain a gold investment without needing to possess any physical gold as they have no storage issues because they are considered to be a dematerialized form of gold and can serve as loan collateral.

Investing in a gold ETF can be done in three simple steps:

  • Open a Demat account; most platforms allow you to open a Demat and trading account online.
  • Provide basic identification and address proof, such as a PAN card.
  • After you've created a Demat account, select a gold exchange-traded fund (ETF) and invest in the unit
  • Your Demat account is credited with the units you have purchased

Note: One gram of gold is equal to one gold ETF unit. The value of the gold ETF corresponds to the worldwide gold price. As a result, if gold prices rise, so does the value of the gold ETF.

4. Investing Gold in Mutual Funds

Mutual funds typically invest in gold production, mining company stocks and distribution syndicate stocks. You will be investing in gold at the current rate if you purchase a gold fund. You’ve made gains in gold if the price of gold at the time of conversion is higher than the price at the time of investment.

The benefits of buying gold funds are listed below:

  • Gold funds are the most trusted source to invest in as only those of the highest purity (99.5%) are chosen and invested in.
  • Investing in gold funds is easy and less time-consuming. Investments can be made through Demat accounts, online platforms, distributors.
  • Since Covid-19 began spreading over the world, this lovely gleaming metal has sparkled. The gold mutual fund category has given roughly 30% returns in the last year and about 50% returned two months ago.
  • Gold mutual funds allow you to acquire gold in segments, with NAVs representing its worth. As a result, rather than investing in grams of gold, you invest in rupees.

5. Investing in a Sovereign Gold Bond Scheme

According to the Reserve Bank of India, this can be used as a substitute for owning physical gold as an investment. As a result, you will be acquiring gold in grams but will not be physically possessing the metal. The purchase must be made in cash, and the bonds must be redeemed in cash when they reach maturity.

The government produces bonds that guarantee regular interest payments (at 2.5 per cent p.a.) and the repayment of principal to investors at maturity, using the price of gold as a benchmark.

The minimum amount of gold that can be invested in SGB is one gram, and the maximum amount that can be invested is four kilograms. The bonds have a five-year lock-in term and an eight-year overall term. For investors with a relatively safe appetite, a gold bond is an excellent choice. It also provides a guaranteed return on their investment, along with a semi-annual fixed income interest.

6. Gold as an Investment through Saving Scheme

These schemes are presented by jewellers all over India.  As per this scheme, the investor must enroll by contributing a certain amount every month for a certain duration of time. They can buy gold from the same jeweller for the amount invested at the end of the tenure, and in some instances, the jeweller will add a monetary incentive or a gift item as well.

For a better understanding, consider you deposit Rs.10,000 a month in the program. After 11 months, you will have invested Rs.110,000, and the merchant would add an additional Rs.10,000 as the last instalment. As a result, you would be able to purchase jewels worth Rs.120,000 for only Rs.110,000.

7. Investing in Digital Gold

You can invest as little as Rs.10 in digital gold! Yes, you read that right, and it also provides optimum security. With so many ways to invest today in gold, digital gold is becoming more popular due to its cost-effectiveness and convenience. You can purchase and sell gold in fractions of a second using digital gold. Every gram of digital gold you buy is backed by genuine 24-karat gold and connected to current gold prices.

In four easy steps, learn how to buy digital gold:

  1. Visit the digital gold website, such as PhonePe, HDFC Securities, Paytm
  2. Enter the amount of gold you want to buy in Rupee
  3. Make the payment
  4. Gold with your name is held in a secure locker/vault once the purchase is completed, and You are given a payment receipt.

It's crucial to understand how gold works before you invest. You bear the risk of losing money with any investment, and that danger is amplified if you don't learn the facts if gold is something you're interested in.

Why Invest in Gold?

Because gold has held its worth throughout history, many people view it as a reliable asset in periods when paper money's value is prone to fluctuation.

Here are some reasons why you should consider gold as an investment:

  • Although gold is no longer utilized as a currency, its status as money makes it superior to all other currencies.
  • Gold will never lose its worth. It will never drop to zero, and it has never done so in centuries. You can always sell it if you need money, and investing in gold will never put you out of business.
  • Even for people who do not have a lot of money to invest and are new to the investment sector, you can start investing in gold with as little as 1 gram.
  • Owning gold provides security since it functions as a safe haven; you may sell or pledge this magnificent metal during a financial crisis and receive cash within a few hours.
  • Even if there is no crisis, you can obtain a fair return and increase your wealth by investing in gold, as investing in gold carries a low to no risk.
  • Investing in gold is simple and straightforward, as it does not require much maintenance, unlike real estate. Just sit back and wait for the returns to double as long as your gold is safe in a bank vault or your home.
  • Gold should be a crucial component of a well-diversified investment portfolio since its price rises in response to changing circumstances.

Regardless of how you choose to invest in gold, read about tax implications and how the type of investment you like fluctuates in reaction to market conditions.

What is the Minimum Amount Required to Invest in Gold?

The minimal investment required varies by Gold investment type and is an important factor in determining affordability. The following table provides you with details of the same.

GOLD TYPEMINIMUM AMOUNT REQUIRED
Physical gold (coins, jewellery)Rs.6000 (Approximate for 1gm gold)
Gold ETF’s₹5,000 (approx. price of 1gm gold)
Sovereign Gold Bonds₹5,000 (approx. price of 1gm gold)
Gold Mutual FundsRs.100
Digital GoldRs.1

Depending on your financial situation, there are a variety of ways to invest in gold. As a result, selecting the best one for your portfolio's requirements can help you get the most out of your money. I hope that this information has been useful in assisting you in making the best investment decision possible.

FAQ

Which form of gold as an investment is the most suitable one today?

Gold as an investment is entirely dependent on your budget, the risk of your investment, and various other factors. We have listed some of the best ways to invest today in gold above; please read through them to gain a better understanding.

What is the minimum amount required for investing in gold?

With maximum security, you can invest as little as Rs.10 in digital gold.

How can I invest in gold on a monthly basis?

You can invest in gold mutual funds, ETFs, or even gold saving schemes that allow you to invest monthly. Please see the article above for the 7 different ways to invest.

Are gold coins a wise investment?

Yes, they are inexpensive, easy to buy and sell and do not incur manufacturing costs.

Is gold a risk-free investment?

Investors regard gold as one of the safest investments. However, if you intend to invest in physical gold, you will need to store it at a bank.

What will the value of gold be in the coming years?

Nobody can predict the market's value in the future, but one thing is certain: gold prices will rise.