Gold is glittering. Consumptions and investments in gold are skyrocketing in India. However, lots of confusions still there in public on how to make right and profitable investments in gold. Some prefer buying physical gold and other group prefer to invest in ETF, gold mutual funds like paper golds. Here is an article that tells you exactly how to invest in gold that meet your requirements well. It discuss the available investment options along with the pros and cons of each. Gold investment is most attractive due to its day to day increasing value. It also a wonderful hedge against inflation, recession or any other investment lose as well as completely free from credit risks. Financial planners recommends the investment portfolio should have gold as a part of it.
Gold investment can be done in 2 ways: Physical and in paper formats. Physical gold investment can be done through buying gold ornaments and bars. Paper form investment focused to pure gold investment.
Forms of physical gold investments:
Buying jewellery’s are the traditional method to invest in gold as well as the most convenient forms of gold investment to those who loves gold to have in their hands always. Buying gold as jewelery is intended to use for public functions as well as getting most fashionable jeweleries in time to time. Major disadvantages of Jewellery investment is the money lose through paying its making charges, storage, locker charges. It also added security risks to the investor.
2. Bullion Bars and Coins
Bars and coins are the easier forms of physical investment with minimum lose of values. Both from jewel shops and banks, public can purchase gold bars and coins. Purity is another major advantage of buying gold as bars and coins. However the major disadvantages of purchasing coins and bars are, safety and storage issues. As mentioned above, there are some making charges still involved as well as lose of value along with such purchases would be bit expensive for small investors. Large purchase of coins and bars must involve insurance and thus bit money lose can be expected regularly.
3. Gold Certificates
Investment in gold certificate can be done thorough approved banks. This is also ensure the purity and safety of gold. However, minimum required investments to get such certificates still makes the gold certificate investments impossible for small investors along with its major disadvantage, the low returns. Gold certificate however allow the investors an option to take repayment in gold or equivalent cash at the time of maturity.
Paper forms of gold investments:
1. Gold ETFs
Gold ETFs are the most favorite paper form investment today. This is totally intended to pure gold investments that does not required any storage, safety, insurance requirements and high liquidity ensure the money can be received fast when sells the gold and no value loss incurred. 100% purity and safety guaranteed in the ETF investments with minimum transaction changes. Purchase gold ETFs can be only done through a trading account thus it is difficult for ordinary people to achieve this investment style. It also required to do a minimum purchase equal to 1 gram of gold. Another disadvantages of ETF investment is, physical possession of gold cannot be happen as it is truly in paper format. However, comparing the safety, purity and less charges, investors who do not required physical possession can prefer this method to buy gold as a future investments.
2. e-Gold investment
In India, investors can open an NSEL (National Sopt Exchange Limited) account with any approved brokers and can e-gold, e-silver, e-copper and e-Zinc. This is similar to buying stocks and shares i.e. when buying e-gold or silver, this would would credited to the DEMAT account. Investors can later sell or hold the gold until they wish to have. This is also a best paper format investment option available in India. You can visit the NSEL website to get more details of e-gold investments. e-Gold investments have a super advantages of either sell your e-gold from the DEMAT account directly or opt to deliver it as physical gold to your hand, depends on what is your requirement. If prefer to deliver ar physical gold, the gold equal to your holding value would be send to your address without any delay. Major disadvantage of e-Gold investment through NSEL is the transactions charges. As an investor you should ask and understood all the charges applicable to
3. Gold Mutual Funds
Gold mutual funds are common in India and allows anyone to invest their money in gold little by little. This is the most convenient option for small investors to invest a small portion of their money in the gold regularly and systematically. Gold mutual funds are Fund of Funds which mean the amount of such funds uses to invest in gold ETFs and the profit would be later shared between gold mutual fund investors. Major intention of gold mutual funds are to allow investments of small amount than buying ETFs by paying the minimum required investments equal to 1 gram of gold. Gold mutual funds also have safety, pure and less transactions charges similar to the ETFs but do not allow physical possession of gold. Minimum investment required in gold fund too and an entry charge and exit charge may be applicable depends on the mutual fund company. Investors can approach mutual fund companies and start investing by filling up a simple form to start the gold fund investment.
Personal gold investments:
My favorite style of gold investment as the part of my portfolio is, investment in gold mutual funds. I have subscribed two gold mutual funds in the name of my kids. I feel a small chunk of money in each month and regularly would do the necessary gold investment requirements and profit in long term. I have also habit of purchasing gold ornaments in special occasions like birthdays, anniversaries etc..