Buying gold on auspicious occasions like Akshaya Tritiya is a part of Indian tradition. According to religious beliefs, buying gold on Akshaya Tritiya brings prosperity and good luck. this year, Third day of Akshaya April 22 will be marked. People buy all kinds of gold from jewelry to digital gold. However, with the changing times and digitization, investors are increasingly opting for digital gold.
What is digital gold?
digital gold a relatively new way to buy Sleep Online. This is an alternative to buying the yellow metal in its physical form. Users can now buy digital gold where an equivalent amount is kept in an insured vault in the form of physical gold. The minimum amount one can buy is as low as one rupee. The customer can choose to sell the entire gold or a part of it at any point of time at the prevailing market rates. However, it is not regulated by any government body such as SEBI or RBI. Tax treatment of digital gold is the same as that applicable to gold
Reasons to invest in digital gold
According to Spare8 co-founder Ronit Harsingani, the following are the reasons to consider investing in the yellow metal digitally.
1) Security
For example, Augmont Goldtech, one of three digital gold providers in India, stores the equivalent in a Sequel vault, which is overseen by an independent trustee. Apart from this, the physical gold kept in the vault is also covered by the insurance.
2) Use as collateral
Very few people are aware that users can also take loans against their digital gold by pledging it. This helps borrowers avoid the tedious process of applying for loans and reduces the chances of rejection.
3) Leasing
Lately, this asset class has helped users shift from a savings to wealth creation model. With Digital Gold, now a minimum of 1 gram of gold can be taken on lease and can earn an interest of up to 14% per annum. The physical gold which was kept in secure vaults is leased to small jewelers who pay interest to the customer who kept it in digital format.
To conclude, this particular asset class not only acts as a savings mechanism, but can be used to open up the entire financial ecosystem to a customer who is just starting out. They can lease it, get credit against it, and ask for physical delivery of it at any time.
With flexibility, no lock-in period, minimum investment amount of Re 1 and with an annualized CAGR of 12% over the last 5 years, it outperforms many other asset classes available in the market today.
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