Gold is considered a safe haven for investment. Every investor should keep the gold investment at 10-15 per cent as part of the investment plan. The value of gold is increasing day by day.
When you start investing in gold in India there are a few things to consider to know the gold investment in better way. Here we have summarised how new investors can start gold investment in India.
Gold as an Investment Option in India
Before discussing this further let me answer a few basic but important questions in your mind. Why should one invest in gold? Is it safe to invest in gold? Will gold investment give good returns?
Make sure you are investing your hard-earned money. This is very essential to answer these questions before investing in gold in India. Why are individuals investing in gold in India? What are the advantages of investing in gold in India?
There are two important reasons why you should invest in gold.
- It is good to invest in gold because it is a boundary against inflation. Over the year gold gives good returns in line with the rate of inflation.
- Another good reason to invest in gold variously interacts with equity investment. For example, consider you have started investing and the equity market performed poorly and gold performed well then it will reduce your total loss in your investment goals.
The above two points might have answered your question that gold is a good investment.
Return on Gold Investment
Is gold investment profitable?
The gold investment proved exceptional returns from 2006 to 2011. During this period of time, gold has given an average return of 29% percent per annum which was better than other investment options.
Anyway, the average long-term retunes on gold investment is below 10% per annum.
An individual can say technically history always repeats itself. As a result, we might observe similar below 10% investment returns in gold rates in the near future once again.
Even if, you want to invest your money in gold in India and cannot stop yourself from attraction then here are a few points on how to invest for good returns in gold.
It is one of the oldest ways of traditional investing. Jewellery buying is where one can buy gold, bars and coins. Nevertheless, gold investment has its own disadvantages, gold jewellery has made changes which are 10% to 20% of the total cost of the jewellery.
Anyway, when you want to sell back the same gold to the jeweller, they will purchase it at below market price and subtract those making charges from the total price of your jewellery.
Invest in Gold Coins and Gold Bars
It is a good option to buy gold coins and gold bars from jewellers. You should decide where to buy gold bars and gold coins. Always buy gold coins and bars from the jeweller. Banks also sell gold coins and bars.
You may wonder why we are suggesting buying these gold bars and gold coins from the jeweller. To answer this question you can ask yourself when you want to sell gold bars and gold coins where you will go. And how to sell gold coins in India.
In India, banks sell gold bars and gold coins but banks can’t take it back, a jeweller can buy the gold bars and coins back from you.
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Invest in Gold ETFs
One can invest in gold ETFs (gold exchange-traded funds). Gold ETFs are basically a type of mutual fund that invests in gold and is listed as a stock exchange.
If you want to invest in gold ETFs then first you have to open a Demat account and trading account as well. You are required to pay a brokerage fee in order to invest in gold ETFs which is generally 0.25% to 0.5% for purchasing and selling gold ETFs in India. However, you will require to pay funds management charges which are 0.5% to 1%.
You May Like to Read: Is E-Gold a Better Option for Investors than Gold ETFs
Gold Fund of Funds
The gold fund is a type of fund that will be investing in gold ETFs in your favour. The best thing here is you need not required to have a Demat account. Since these funds are like mutual funds SIP investment is possible in gold funds. Investing in gold funds is as easy as investing in other mutual funds.
Gold Funds based on Equity
When you are investing in gold funds based on equity you should do deep research before investing in these funds. However, equity-based gold funds do not invest in gold directly instead they invest in companies that are involved in mining, extracting, and marketing the gold.
Remember one thing that the performance of equity-based gold funds depends on the performance of fund houses. The performance of equity-based gold funds also depends on the gold rate movement in India.
How to Invest in Gold Online?
One can start investing in gold in India online as an E-gold investment, gold ETFs and gold funds. One can buy gold funds online like other mutual funds products. You can buy e-gold from the bank in order to invest in e-gold.
Investors always invest in gold 5% to 10% of the total investment not more than that because gold investment returns over the year are below 10% per annum.
Consider asking yourself a few questions about yourself why you are investing in gold in India before putting your hard-earned money into gold. Experts say investors should not buy gold jewellery instead they should buy gold coins, and bars, or invest in E-gold.