Last Updated on October 30, 2023 by BFSLTeam BFSLTeam
Gold has always been a popular investment asset for investors worldwide. It is considered a safe haven asset that can provide stability to your portfolio. In this blog, we will discuss four ways of investing in gold and diversifying your portfolio.
Table of Content
1. Digital Gold
Investing in gold has never been easier or more affordable than with Digital Gold. You can buy and sell gold in small fractions at any time, starting with just Rs.10! Each unit of digital gold is backed by physical 24k gold and tracks real-time gold prices. Here are the advantages:
1. No need for a large investment; you can start with just Rs.10.
2. Digital gold is securely stored and insured in vaults.
3. Sell digital gold anytime and receive funds within two working days.
4. No making charges, unlike physical gold or jewelry.
5. Regular small investments can build up a significant gold balance.
6. Some platforms offer the option to convert digital gold into physical gold when needed.
2. Gold ETFs
Gold ETFs are exchange-traded funds that invest in physical gold. They are traded on stock exchanges like shares and offer investors an easy way to invest in gold without the hassle of storing physical gold. Gold ETFs are also more liquid than physical gold and have lower charges than mutual funds.
Also Read: How to Invest in Gold Exchange Traded Funds?
3. Gold Mutual Funds
Gold mutual funds are mutual funds that invest in companies engaged in gold mining or processing. They offer investors an indirect way of investing in gold and are more diversified than investing in physical gold or gold ETFs. However, they may have higher charges than gold ETFs.
4. Sovereign Gold Bonds
Sovereign Gold Bonds (SGBs) are government securities denominated in grams of gold. They offer investors an easy way to invest in gold without the hassle of storing physical gold. SGBs also offer an interest rate of 2.5% per annum, which is higher than the interest rate offered by other fixed-income investments.
Important Considerations Before Investing in Gold
Investing in gold can take various forms, and it’s essential to be aware of the nuances:
- Gold stocks and mutual funds may perform differently from physical gold due to various influencing factors.
- Gold’s price is influenced by factors like supply, demand, and economic conditions.
- Prior to investing in gold stocks or mutual funds, conduct thorough research on the specific company or fund.If you opt for physical gold, ensure it’s stored securely.
- Gold prices often move inversely to stock markets, but exceptions exist.
- Diversify your investment portfolio to handle various economic conditions.
Why Consider Investing in Gold?
1. Long-term Store of Value:
Gold has historically maintained its value over centuries, making it a reliable long-term asset. Its ability to function as a form of money adds to its appeal.
2. Inherent Value:
Gold doesn’t rely on a promise to pay, unlike currency. It has maintained value for over 3000 years, never dropping to zero, even in market collapses.
3. Inflation Hedge:
Gold serves as a hedge against rising inflation, as its value tends to rise when currency depreciates.
4. Liquidity:
Gold offers high liquidity, allowing for quick buying and selling.
5. No Specialised Knowledge Required:
Unlike stocks and mutual funds, gold investment is straightforward and doesn’t require in-depth market knowledge.
6. Diversification:
Gold has a low/negative correlation with other asset classes, making it valuable for diversifying investment portfolios.
In Conclusion
Always remember that any investment decision should align with your financial objectives, investment horizon, and risk tolerance. To gain further insights into gold investing, don’t hesitate to consult with an experienced investment advisor.
