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How to Start Investing in Gold?

Updated On Jul 13, 2021

If you are someone who is looking ahead to diversify your investments and lower your risk appetite, then most probably you may be seeking for a so-called safe haven investment option that could give a better performance at the time when the whole market is down. The best safe investment option can be none other than gold. Read the article to know some ways regarding how to include gold in your financial portfolio.

How to Start Investing in Gold?

You can start investing in gold through following ways:

1. Purchase Physical Gold

Investors can get gold exposures by buying gold jewellery, bars or coins. It is amongst the traditional methods of investment in gold that has been followed for since long ago. You are just required to go to the jeweller and purchase gold bars, coins or jewellery. One thing that you must note here is that the jewellery you buy involves making charges which later are not considered when you decide to sell your jewellery in the market. However, gold bars or coins do not involve any making charges.

2. Gold Mining Stocks

A direct investment into the gold mining stocks of the company is also considered to be one of the best gold investment options in India. In case you are wondering about how investment in the stocks of the gold mining company is different in comparison to stocks of another company, then it is important for you to know that the prices of stocks for these companies are based upon the prices of gold in India. However, it is not the only factor that impacts the returns earned, other factors are involved too including effective management, production cost, hedging activities, reserves and project development. In India, under the gold mining sector, there are around 300 gold mining companies listed.

3. Gold Exchange Traded Funds

In case you are already aware about investment in mutual funds, then Gold Exchange Traded funds function similarly as these are mutual funds which involve investing your money in gold and certain units of these MFs are also mentioned in the stock exchange. The gold ETFs can be purchased by you through stock exchange and for this you need to have a DEMAT and trading account following that payment for the fees for buying and selling them, which is referred to as brokerage fee and stands generally around 0.25%-0.5% of the cost of Gold Exchange Traded Funds.

4. Equity-based Gold Funds

This is one of the indirect methods of investment in gold, wherein the amount invested by you into these equity based gold funds goes to those companies which further invests your money in the companies which are working on or are connected to marketing, extraction and mining of the gold. The returns and performance here is based on different factors such as the fund house performance and the companies in which investment is being done, in contrast to other options wherein the performance is based directly on the prices of Gold in India.

Final Words

Now after a detailed discussion regarding various gold investment options highlighting the disadvantages and advantages of investment in gold with respect to each of them, we hope that this article would have given you a somewhat basic knowledge regarding investment in gold. Lastly, we would conclude by saying that prior to  making any decision, do careful research regarding gold investment as they are subject to market risk and also analyze each of the other aspects carefully.

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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.

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