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.
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..!!