The lustrous yellow metal isn’t just limited to physical touch to have a sense of investment. In fact, there is now a vast pool of gold investments offering a sense of security and market-related returns to investors keen on gold. Like its name, gold is actually seen as an opportunity for hedging returns even amid economic uncertainties. Gold is seen as a safe haven when inflation is very high which usually leads to a sharp correction in equities. The year 2022 has so far been no different with geopolitical tensions, inflationary pressures, supply-chain disruptions and economic risks playing a major role in influencing the market. However, gold itself has the potential to be a safe haven investment.
Currently there are five different options in which you can invest in gold. These are Gold ETFs, Gold Mutual Funds, sovereign gold bondDigital gold and physical gold.
To find your favorite type of gold InvestmentWeigh the pros and cons of these options.
For example, according to Fintu founder CA Manish P. Hinger, when it comes to demat accounts, only gold ETFs make it mandatory for investors to open a demat account before investing. The risk of theft or purity will only concern you if you invest in physical gold, as these are the only ones you can hold physically. This includes gold bars, bullion, jewellery, etc. However, for digital gold, you may have to compulsorily take physical delivery after a specified time, say 5 years, or sell the gold or pay additional charges.
Furthermore, the founder of Fintu pointed out that all these gold investments also offer high liquidity. However, Sovereign Gold Bonds have a lock-in period of 5 years. If the Sovereign Gold Bond is held for a maturity period of 8 years, then no tax will be applicable on capital gains. These bonds offer an interest rate of 2.5% on a semi-annual basis. For the rest of the gold investment options, STCG will be taxed as per your slab rate, while LTCG will be taxed at 20% with the benefit of indexation. 3% GST will be applicable only on physical gold and digital gold.
Sovereign Gold Bonds issued by the RBI on behalf of the government are available to resident individuals, HUFs, trusts, universities and charitable institutions. The tenure of the scheme is eight years, while it offers a fixed rate of 2.50% per annum on nominal value payable half-yearly. These gold bonds are also eligible for trading. In addition, they can be used as collateral for loans.
Explaining one of the advantages of sovereign gold bonds over their counterparts, Manish said that there are no charges. Whereas, the making charge of physical gold is around 20-25 per cent. The brokerage charges for Gold ETFs are around 1%. The expense ratio of Gold Mutual Fund is also around 1%. Digital Gold includes an additional charge of 3% for storage, insurance charges, etc.
Also, Manish pointed out that unlike gold ETFs and gold mutual funds, physical and digital gold is not regulated by SEBI.
Gold ETFs are like a substitute for physical gold, however, they are invested in physical form. Gold ETFs combine the flexibility of stock investment with the simplicity of gold investment.
Meanwhile, apart from being regulated by SEBI, Gold Mutual Funds are open-ended funds that invest in gold and gold-related instruments such as bullion, coins, etc. These funds are used to create wealth for investors in the midst of economic shocks. Thing. You can invest in gold mutual funds through Systematic Investment Plan (SIP) and like every normal SIP, investors can invest a fixed amount on a monthly basis for their future goals.
Thus, he said, you can invest in these options as per your convenience. Except Sovereign Gold Bonds as they allow you to invest only when the SGBs are open for subscription, which is usually around 3-4 times in a year. And if you are looking for SIP investment, then gold mutual funds may be right for you.
According to Good Returns data, what is the cost of 10 grams of 22 carat gold? up to 49,950 on Sunday 250 from the previous day. Along with this, there has also been a rise in 24 carat gold in the same gram. from 270 54,490 as against the previous day.
Disclaimer: The views and recommendations given above are of individual analysts or broking companies and not of Mint.
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