Tips to Invest in Gold
Published On Jun 01, 2021 12:00 PM By Gunjan Anand
Table of Contents
Gold is considered a symbol of wealth and prosperity across the world that makes it one of the most favourite instruments for investors. People buy gold and invest in it irrespective of income and age. Gold becomes the centre of attraction in times of economical crisis as it is considered the best hedging instrument to cope up with inflation. Despite all the positives, it is suggested to exercise some caution while buying gold.
Tips for Investment in Gold
Here are some tips that you must keep in mind while investing in gold.
1. Always Prefer Digital Gold
It’s always recommended to invest in digital gold rather than buying them in physical form. Actually, digital gold investments are free from the worries of purity, security and storage, unlike physical gold. Also, physical gold investments can involve GST and making charges which might lower your actual returns.
2. Invest in Sovereign Gold Bonds
When it comes to digital gold investments, it is suggested to put your investment in the RBI-backed Sovereign Gold Bonds instead of gold mutual funds and gold ETFs as the former provides a return of 2.5% per annum on the real gold price on the day of sale of these bonds, which ultimately results into higher actual results. Also, the SGBs are more tax-efficient as per the provisions of the IT Act.
3. Gold Mutual Funds Vs Gold ETFs
If you are confused about investing in gold mutual funds or gold exchange-traded funds (ETFs), you must know that you may get a higher return through the ETFs initially owing to their low investment cost. But, before omitting the gold mutual funds for their high expense ratio and exit loads, it is crucial to know that it is quite easier to invest in them in comparison to the gold ETFs.
4. Limit Your Gold Investments
Despite the hikes in the gold prices, you should not forget that sometimes its prices tend to flatline too for a long period of time. Therefore, it’s recommended to limit the gold investments between 5-10% of your entire investment portfolio’s cost to ensure you achieve your monetary goals in a stipulated time with the assistance of a diversified investment strategy.
5. Check Purity and Hallmarking
If you wish to invest in physical gold by purchasing gold jewellery, gold biscuits, etc., then you must take some precautions. Purchasing gold from small and unbranded jewellery shops can sometimes cost you high because of its purity, genuineness, and so on. Hence, you should always check the purity of jewellery you are purchasing to avoid hassles in future. Checking the making charges, hallmark, and so on can help you buy pure gold in physical form that will offer you high returns.
No matter how much money you invest, the returns will depend on the type of investment and precautions you take while investing. Gold is the god of investment instruments, but making investments with uninformed decisions can hit your returns. Therefore, following the above-mentioned tips will help you gain more and assured returns on your gold investment.
You may also like to read:-
- Reasons Why Fixed Deposit Should Be In Your Investment Portfolio
- Post Office Fixed Deposit (FD) Scheme
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.