Indians' obsession with gold is no secret. For weddings, religious occasions, as well as festivals, buying gold, has always been a popular ritual. But it is much more than being just another investment option or a status symbol. It is also insurance against financial emergencies. Earlier, gold could only be brought in its physical forms like jewellery, gold bars, and coins. This form of investment was risky as well as expensive. However, today there are various ways through which one can invest in gold. For investors, gold is a safe and risk-free investment that can be bought through ETFs (exchange-traded funds) as well as mutual funds and stocks. Gold investments are considered risk-free as gold prices are inversely related to equities.
Here are some cost-effective options to invest in the yellow metal:
1) Sovereign Gold Bonds (SGBs)
SGBs are a way for investors to own gold in an alternate manner, compared to owning physical gold. This scheme was introduced by the government of India. The SGBs are issued by the Reserve Bank of India towards the end of 2015. This scheme has a lock-in period of 5 years and upon maturity, the investment made is redeemed in cash.
2) Digital Gold
Gold can be bought digitally through various platforms. The minimum investment amount for digital gold can be as less are Re. 1. This gold can be delivered to you as physical gold. Most of these digital platforms have a tie-up with traders and gold manufacturers.
3) Gold Exchange-Traded Funds
Gold ETFs are investments that are traded in the stock market. To invest in gold ETFs, one must have a Demat account with a bank. Investing in gold ETFs does not mean you own physical gold. It means you have invested in gold in an electronic form.
4) Gold Mutual Funds
This is a scheme wherein investments from various investors are pooled together and invested in a particular scheme. One does not require a Demat account to invest in gold mutual funds; they can be availed through any commercial bank.
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