Buying gold during festivals is an ancient tradition in India. Nowadays, most of the people like to invest in gold in the form of gold jewelry, gold coins etc. during festivals.
Also, in case of buying gold as a commodity, it has to pay a high price for insurance, protection and handling, damages.
Therefore, investors are switching to digital gold called paper gold.
Apart from convenience and security, some digital gold options also have tax benefits that further benefit investors.
You may think that investing in gold requires a large amount of savings from your income. As far as digital gold is concerned, you can start at a very, very low price.
You don’t need to buy even 1 gram of gold as the value of 1 gram of gold is quite high. Instead you get the option to buy gold in milligram. That means you can invest even if you have Rs.1.
This gold is available in 24 carat to 22 carat. 24 karat is 99.99 pure gold. This gold has complete protection.
Sovereign Gold Bonds (SGB)
Investors pay the price in cash and receive the lump sum on maturity. It is considered a safe way to invest in gold,
People who have a long investment objective of 5 years can invest in this. Reserve Bank of India issues these gold bonds every year. Investors can access the secondary market to sell these bonds.
These bonds offer investors an interest rate of 2.50 percent (fixed rate) per annum on the initial investment amount. The investor gets the interest loan on semi-annual basis.
On the other hand, SGBs have a lock-in period of 8 years. One can exercise the exit option only on interest payment dates from the fifth, sixth and seventh years.
Alternatively, if investors need to exit before 5 years, they should sell the SGB in the stock markets. Capital gains are exempt from such securities.
Gold exchange traded funds allow individuals to invest in gold. These can be bought and sold in the stock market just like stocks.
All these are listed on the stock exchange. Investors can engage in trading to buy or sell during market hours.
Gold mutual funds
Gold mutual funds are open-ended funds that allow citizens to invest without having a demat account.
Professional advice is important to invest in this scheme.
This also comes under mutual funds scheme. A full understanding of this is required.
Nowadays buying gold does not require huge investment. Buying gold digitally is very easy.
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