Planning To Invest In Gold Through SIP? Here’s What You Need To Know

SIP or a Systematic Investment Plan is a facility offered to investors through which they can invest fixed amounts into various funds at regular intervals. This fixed amount does not need to be very high, it can be as low as Rs 500 and the timeline an investor chooses can be on a weekly, monthly, annually, and semi-annually basis, as per their convenience. Gold is a very sought-after investment. Earlier, people would invest their money in gold by buying jewelry or coins. However, now it is possible to buy or invest in gold digitally through Gold Mutual Funds and a Gold Exchange Traded Fund (ETF).

So, if you want to invest your money in gold, these 2 reasons would make it a good choice:

1) Gold is a safe investment, as it's known as a hedge against inflation. In other words, it's considered an investment that beats inflation.

2) Even when the market is going through turbulence, gold prices usually don't fall. Having said that, there could be times when the price of gold does actually fall, but those phases don't last long.

Now, let's see how you can buy gold digitally!

There are two ways of buying gold digitally — Gold ETFs and Gold Funds.

Gold ETFs: This is basically buying gold digitally through a demat account that is equivalent to a physical sum of gold.

Gold Funds: In this case, you buy or invest in stocks of companies that mine gold. Gold mutual funds include silver, platinum, and other metals. Gold funds are looked after by a mutual fund manager.

Investing in gold through SIP

In this case, you invest a fixed amount regularly into digital gold. Investing through SIP is a convenient option for people who do not have a demat account, which is required for investing in gold ETFs. A SIP in gold is also more affordable because the investor can deposit a fixed amount every month as per convenience and budget. Investing in gold through SIP will enable you to buy gold and build your wealth in a steady manner.

Advantages of a gold SIP

As an investor would have to shell out a certain amount of money at regular intervals, she/he will be disciplined in her/his approach towards investing.

If a person is planning to opt for a long-term investment, then they can choose gold SIPs instead of investing a lump-sum amount.

Since a gold SIP is a periodic investment, a person doesn't need to keep track of volatility. Investing a fixed sum of money regularly towards gold at specific intervals would reduce your average cost of purchasing the asset in the long run.

Gold SIP allows a person to invest in small denominations at periodic intervals. All that a person needs to do is instruct the bank to auto-debit a certain amount every month, without having to worry about the hassles of missing out on the investment.