Gold has been a significant investment option for people for centuries. Back in the day, people had only limited ways to invest in gold as they either had gold in solid form or in the form of jewellery. However, today when times have changed and the world has become advanced, people have multiple ways to invest in gold and get great returns over time.
Here, we are going to learn about why you should invest in gold and what gold investment options you can consider. So, let’s take a dive into the topic and understand the best ways to invest in gold.
Reasons to Invest In Gold
Gold, whether you buy digital gold or physical gold, holds timeless value. However, there are many other reasons why investors turn to gold. Major ones include:
1. Safe Investment
Gold is one of the few things that is capable of retaining its value even during times of economic instability or geopolitical tensions. So, when you invest in gold, you can remain assured about its value and good return.
2. Shields During Inflation
When you take a look at the history of gold, you will find that it has always served as a safeguard against inflation. Consequently, when you are invested in gold and face tough events like inflation, you will still be able to preserve your purchasing power.
3. Diversification
To diversify your investment portfolio, you can also consider investing in digital gold, solid gold, gold schemes, etc. It is because when you include gold in your portfolio, it reduces overall risk, as its price movements often differ from those of stocks and bonds.
4. Capital Appreciation
Though it is not guaranteed, gold also has the potential to increase in value over the long term and this way you can enjoy capital gains over a period of time.
5. Store of Value
Gold has been recognised as a store of value for centuries as it offers stability in uncertain times, whether it is in the form of virtual gold, physical gold, or jewellery.
9 Major Ways To Invest In Gold
Here are the best ways to invest in gold you can consider:
1. Solid Gold
Solid gold, otherwise called physical gold, is usually in the form of coins and bars. These gold coins and bars have been the most traditional forms of gold people have invested in. You can purchase them from reputable dealers and store them in your private spaces or secure vaults for safety. As physical gold is a tangible property, it provides you with a sense of security. However, it may cost you storage fees and insurance fees.
2. Digital Gold
Today, when everything has come online, you also have the option of virtual gold investment. There are several online platforms and apps like CASHe where you can buy or sell gold electronically for whatever amount you wish to invest. And this is what is digital gold. This digital gold would be stored on a blockchain and backed by physical gold stored in secured vaults. The best part when you buy digital gold online is that you can invest from anywhere in the world. Also, you would not have to worry about its storage.
3. Jewellery
Quite a popular form of gold investment! While jewellery serves a dual purpose as you can wear it as well as consider it an investment, it is essential to consider factors such as craftsmanship and design when buying jewellery as an investment. Moreover, you should be mindful of markups and resale value when purchasing gold jewellery.
4. Sovereign Gold Bonds
Sovereign Gold Bonds are issued by governments and like digital gold, these are also backed by physical gold. These bonds offer you a fixed interest rate along with the potential for capital gain, though it is based on changes in the price of gold. Sovereign Gold Bonds can be purchased through designated banks or financial institutions during specific issuance periods. You can hold these bonds in paper form without the need for physical storage.
5. Gold Schemes
You can also consider investing in gold schemes offered by governments or financial institutions. Here, you can regularly contribute a fixed amount towards purchasing gold. These schemes often come with attractive features such as discounts or bonuses upon maturity.
6. Gold ETFs
Another best way to invest in Gold! Gold ETFs (Exchange-Traded Funds) are a type of investment fund traded on stock exchanges and are much like stocks. They are backed by physical gold and hence, reflect its price. If you are looking for a convenient option that would offer liquidity and easy access to the gold market without the need for physical storage, then Gold ETFs are for you.
7. Gold FOFs
Gold FOFs (Fund of Funds) invest in other Gold ETFs rather than directly in gold itself. These funds have options like SIP, lump sum investment, small investment and any-time withdrawal. They provide diversified exposure to the gold market and are managed by professional fund managers. This can be an excellent option for you if you are seeking indirect investment in gold with expert management.
8. Gold Mutual Funds
Invest in gold mining companies and gold-related assets to get great returns. These Gold Mutual Funds are managed by professionals and provide diversification within the gold sector. Also, in comparison to direct gold investments, they offer higher returns. However, these funds also come with higher risks.
9. Gold Mining Stocks
Investing in gold mining stocks involves buying shares in companies that mine gold. These stocks can offer significant returns if the companies perform well, and hence, you can benefit from increases in gold prices. However, they also carry higher risks due to the operational challenges and market volatility faced by mining companies.
Which Option Should You Select?
Looking for the best gold investment option? Well, it’s time for you to assess your financial goals, risk tolerance, and investment horizon. If you prefer tangible assets, solid gold or jewellery might be suitable. For convenience and ease of trade, digital gold or Gold ETFs are great choices. If you are seeking professional management, then you can consider Gold Mutual Funds or FOFs. Keep in mind that it is always important to analyse your needs so that you can determine the safest way to invest in gold for your situation.
FAQs
1. Is Gold a Good Investment During a Recession?
Yes, gold is often considered a safe haven during economic downturns. It is mainly because the value of gold tends to remain stable or even increase during a recession. This is what makes it one of the best investment options to protect your wealth.
2. How Do Beginners Buy Gold?
If you are a beginner, then you can start by investing in digital gold through online platforms like CASHe or by buying Gold ETFs.
3. Which Form of Gold is Best for Investment?
Digital gold is considered as one of the best forms for investing in gold due to its convenience, ease of purchase, and secure storage on the blockchain. Also, it offers flexibility and can be traded anytime.
4. Is Digital Gold Taxable?
Yes, digital gold is taxable. Any gains you get from selling digital gold are subject to capital gains tax.
5. What is the Safest Way to Buy Gold?
The safest way to buy gold is through reputable platforms or financial institutions offering digital gold or Gold ETFs. These options provide secure transactions and storage, and hence, reduce the risks associated with handling physical gold.
