Best ways to invest in Gold

Gold..!! we Indians love gold, we recently started looking it  as investment option especially when the returns on gold are extremely high  these days. Usually,  we buy gold in the form of physical gold  for regular consumption like jewellery . But if you are looking gold as investment option, buying jewellery does not yield good returns because of huge making charges and another thing is securing gold , keeping it safe place is difficult. Though you can keep it in bank lockers, but again you need to pay charges for it . Apart from that if you want to wear some jewellery,  you can  go for physical form of gold, but not for pure investment purpose.

These days we are seeing many banks and jewellery shops are selling gold coins in minimum quantity of 1 gram and many investors are using this option . But if you want to sell it back , banks wont buy it from you. And if you sell it outside you wont get good returns as other jewellars buy this coins 5 to 10 %  less than the  market rate.

So, If you are looking to invest gold for long term like for children marriage , then you can look for below options wherein you can just buy in very less quantity like 1 gram per every month and as this form of gold is not physical and no need to worry about theft.

1.Gold ETF

To buy Gold ETF (Exchange Traded Fund) you must need to have demat account. You will buy gold using your demat account same like stocks with National Stock Exchane lts . As this is paper gold , you need not worry about theft and purity of the gold. After few years when you are reaching your goal, you can easily sell these gold units using demat and get the money.

Below are the Asset Management Companies (AMC)  who own gold ETFs .

AxisGold by Axis Mutual Fund

BSLGoldETF by Birla Sunlife Mutual Fund

Goldbees by Goldman Sachhe Asset Management

GoldShare by UTI Mutual fund

IDBIGold by IDBI Mutual fund

IPGETF by ICICI prudential Mutual fund

KotakGold by Kotak Mutual Fund

SBIGETS by SBI Mutual fund

RELGOLD by Reliance Mutual fund

Gold bees and Kotakgold are famous. Returns on gold etf of any AMC is almost same. but you should consider best AMC where you have more liquidity.

Little amount will be deducted as Asset management fee and  brokerage charges will be deducted while buying or selling. Gold ETF tracks in NAV (Net Asset Value),  Few gold ETFs have the flexibility to invest small percentage of the total net assets in money market instruments .


2. E Gold

E gold is the electronic form of gold and you will buy gold in small quantities like 1 gram onwards and one  unit is equivalent to 1 gram. This e gold is introduced by National Spot Exchange(NSE), you can buy or sell using demat account. But the demat account which you have for shares is not used for e gold.

To buy e gold you an individual can open client account with member of NSEL and need to open beneficiary account with any of Depository Participant (DP). From NSEL site, you can find the member list and DPs.

In e gold, Delivery of physical Gold is possible in specific locations.The minimum quantity these can be converted into is a 1 g gold coin, and in denominations of 8 g, 10 g, 100 g and 1 kg. There will be no delivery charges for this.  There will only small transaction charges will be applicable. As  there is  no storage or AMC costs, these commodities give better returns compared to gold ETFs.

3.Gold Mutual Funds

To invest in Gold mutual fund, you need not require demat account. Main advantage is that with this route, you can invest in gold using Systematic Investment plan (SIP), every month some amount is deducted from your account  and purchased this paper gold. But, it costs higher,because your mutual fund company will buy gold ETF on behalf of you, so there will additional charges for mutual fund company and ETFs.

If you are not disciplined investor, then you can choose this option as using SIP,  money will be deducted automatically and gold units are credited.

Though there are other options called gold futures , it requires  huge knowledge to predict the market condition. So if you are basic investor you better not choose gold futures. Try out any one of the above options.

So, Are you ready to invest in GOLD..!!

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About Sravanthi

Hi ..I am Sravanthi, working in IT field and i'm more passionate about managing personal finance. I am writing this blog to help people especially salaried employees to invest their money wisely . Check out the articles ..happy reading :)


6 thoughts on “Best ways to invest in Gold

  1. Sravanthi, at the time of sale in all the options mentioned above is the difference taxable under short term . /long term capital gains?
    I feel the investment should be done based on the net taxable income / return you get.

    Posted by Mallikarjuna Gupa | March 6, 2013, 5:42 am
    • Hi Mallik,

      Incase of egold , if you sell the units before 36 months then there will bne short term capotal gain tax. So in this
      case the returns are clubbed in the overall income of the person and depending on which tax slab he falls in, he will be taxed accordingly. If you sell after 36 months, then it comes under long term capital gain taxed @ 20 %

      In cae of Gold ETF, The holding period for long-term capital gains is one year whereas for E-Gold it is three years. Gold ETFs offer you a flat slab of 10 percent capital gains which is not available for E-Gold; they only have 20 percent after indexation for inflation based on the cost inflation index.

      If one is looking at very long-term then E-Gold is a good option to use.For those planning to hold commodities in the form of E Series products for a long time period, these tax should be considered negligible.


      Posted by tipsforinvestor | March 17, 2013, 4:17 am
  2. That may be true, but you can’t ignore unsound money.

    Posted by invest in gold | March 7, 2013, 2:31 pm
  3. 65107 286385You made some good points there. I did a search on the topic and found most people will agree with your blog. 861485

    Posted by IDRzDKDID | March 8, 2013, 5:04 pm

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