In view of rising gold prices, investors are considering investing in the precious metal. Since gold investment is not limited to physical gold only, people invest in electronic and paper gold as well. So, for those gold investors who want to invest other than an alternative to physical gold, Nitin Kamath, founder and CEO of Zerodha has an age-old suggestion. In an earlier tweet, the Zerodha founder said that Gold ETFs and Gold Mutual Funds should be preferred for Digital Gold after Sovereign Gold Bonds. He said that by choosing Sovereign Gold Bonds, Gold ETFs and Gold Mutual Funds ahead of Digital Gold, the investor will be able to save an additional 5 percent difference in the buying and selling of gold.
Elaborating on why one should invest in SGBs, Gold ETFs or Gold Mutual Funds, Nitin Kamato Tweeted, “Looks like everyone is selling digital gold. On digital gold, you lose 3% as GST, up to 2% in commission, and spreads > 5% (buy-sell difference). If You are looking at gold as an investment option, Gold ETFs/MFs are the best option after Sovereign Gold Bonds.”
Digital Gold Vs Sovereign Gold Bond Vs Gold ETF Vs Gold Mutual Fund
On why Sovereign Gold Bonds are the best of all possible gold investment options, Archit Gupta, Founder and CEO, Clear said, “Investors get 2.5% per annum interest from SGBs, which is added to the investor’s taxable income. and are taxed as applicable. Income Tax Slabs. The maturity period of SGBs is eight years. Capital gains from SGBs, if held till maturity, are tax free. However, the investor can time SGBs after five years. If you redeem the SGB between five and eight years, the gain is treated as long-term capital gain. It is taxed at 20.8% (including cess) along with indexation gains.”
“Investors can buy and sell SGBs on the stock exchange. If the SGBs are sold before three years, the capital gains are added to the income of the investor and taxed on the basis of applicable income tax slabs. Also, on selling SGBs Capital gains earned by investors are long-term after three years on the stock exchange and are taxed at 20% along with indexation gains,” said Archit Gupta of Clear.