Best Gold Investment Schemes in India- Types and Comparision

Last updated on October 19th, 2023 at 04:00 pm

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The Indian people have always been fond of gold investment schemes. As a result, India is the second largest gold jewellery consumers in the world with an import of 611 Tonnes of gold in 2021.

The gold purchase is considered as savings rather than investment in India. Thus, the majority of gold purchase happens in retail market and purchased as gold ornaments.

Though there are risk in having a gold in Ornament format such as security, value diminishing, etc, the physical gold is preferred by the Indian people as it brings more liquidity to them.

But it is not the only way of saving/ investing in gold in India. Here in this post we will give you different modes through which you can invest in gold in India.

Benefits of Gold Investment

Though there are many investment and savings options in the market, the Gold investment is preferred by novice to the expert investors.

People are inadvertently investing in Gold because it gave a better result when compared to the other investment indexes over the long time.

Following are the important benefits one gets from investing in Gold.

  • Liquidity – Gold is more liquid form of asset as it can be easily sold and can be converted to cash. Moreover, the gold is accepted as a collateral for secured loan in banks and financial institutions.
  • Physical Ownership – If you have a gold in ornament or in a gold bar, you hold a physical gold which will not be affected by the cyber threats. Thus, the physical gold always comes in handy in mitigating the digital threats.
  • Return Over Time – Gold has performed well over the past 50 years. It has given 9-10 % annual return in this period (Approx). Hence it is proved to be a safer option even in volatile markets.
  • Investment for Longer Term – The gold does not have intermediator like in other investment options. Thus, you can go for gold investment without doubt for long term investments.
  • Protection from Inflation – The return on investment in gold has beaten the Inflation rate in the country over time. Thus, it is a better savings option to hedge against the inflation.
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Gold Investment Schemes in India

Though the physical gold purchase dominates the Indian gold market, there are several options which are more secure and easy to invest.

There are three classifications under which you can make an investment. They are

  1. Physical gold
  2. Digital Gold
  3. Gold Bond/ Equity

Though there are more subclassifications these are the basic type of investment options available for investors. We will see in detail of each option below.

1. Physical Gold

The physical gold as said earlier is the most used options for saving in Gold. A major part of the gold is purchased as ornaments and held in physical form.

  1. Ornaments/ Jewel – The major physical gold in India is kept as ornaments/ Jewels. Apart from the investment/ savings the physical gold ornaments provides cultural value for the Indian women’s. It provides easy access to fund in emergencies.
  2. Gold Coins/ Bars – The other physical form is Gold Coins/ Bars. It is only for the people who want to invest in gold. The making cost is lesser compared to the Ornament form. But the value will remain the same as other investment options.

The physical gold requires additional. protection and security. But it will be a good option if it is purchased for long term need and personal use.

2. Digital Gold

The alternate mode of Investment option to Physical gold is Digital Gold. Though the digital gold is a new concept and only getting a little traction, it has variety of features for investors.

The digital gold is kept in the digital format i.e. there is no physical gold is involved. But the price is directly linked to that of the physical gold.

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This provides secure way of investing in gold as there is no need for physical security measures.

It is more liquid and reduces the charges such as making charges, depreciation of value and security requirements.

Moreover, the digital gold reduces the requirement of physical gold and government can reduce the import of the gold. Hence reducing the reliance on other countries for physical gold requirement for mere investment purpose.

3. Gold Bond/ Equity

The other form gold investment options are as below

  1. Sovereign Gold Bonds (SGB) – The Sovereign Gold Bond is a Government of India initiative to reduce the requirement of physical gold and providing alternative mode of gold for investors. The SGB apart from linked to the value of gold also provides interest at 2.5 % per Annum for the amount invested with maturity period of 8 years.
  2. Gold Exchange Traded Fund (Gold-ETF) – It is the type of ETF which only invests in Gold and the price of which is linked to the gold. Thus you can trade it as an equity in the stock exchange.

The Bond/ Equity mode of holding a gold is gives more option for the investors to trade. Even SGB can be purchased in demat form and can be traded in stock Exhange.

Conclusion

The Indian families and culture always celebrated Gold as a prestigious requirement. But the gold gives the leverage for the public to have a liquid asset that can be used in the emergency situation.

But now people understand the importance of investment, especially in the gold investment. Thus, the demand provided different types of investment option for different investors. Each with different benefits and cons.

Choose the type of investment you want based on your requirement.

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