Gold is always gold. Investment in gold has given better returns against inflation and on long tenure. Gold can be used as hedge against inflation. There are various options available for Investment in gold. Choose your options wisely to invest.
Gold Jewellery:
Indians are very fond of gold ornaments. Purchasing the gold is one form savings for Indian household. It is always preferred to hold gold instead of idle cash. But on purchase of gold ornaments individual has to forego making charges and wastage which adds to irrevocable cost.
Gold Coins and Bars:
Gold coins and bars can be purchased from jewellers , Banks, Non Banking Institutions. Gold coins will be of 24 carat and 99.9% purity and hallmarked as per BIS standards. Banks and financial institutions may charge premium for gold coins over the prevailing rates.MMTC is recognised by Government of India for minting and supply of gold coins.
Gold Savings Scheme:
Gold or jewellery Savings Scheme comes with two options. One scheme allows you to deposit fixed sum of money for a chosen period. At the end of the tenure, jeweller will add bonus. You can purchase gold equivalent to the value accumulated from the jeweller. Another scheme allows you to accumulate gold in terms of weight say 3 grams per month for fixed tenure. You can purchase jewellery equivalent to accumulated weight by end of the tenure without wastage or making charges.
Digital Gold:
Digital gold is purchasing of gold coins and bars online. Instead of physical possession gold is held online in individual account. Digi Gold is offered by paytm, phonepe and other websites. It is easy to buy and sell online. Digi Gold has various advantages like safety, liquidity.
Gold ETF:
Gold Exchange traded fund is a open ended funds that are traded in the major stock exchange. Gold ETF funds are units representing physical gold which may be in dematerialised form or paper form. Each unit of gold ETF represent one gram of gold. Individual can buy gold ETF and store in demat form.Gold is available at the international rate and there is no premium added to the rate. Gold ETF does not attract making charges or wastage.
Gold Schemes by Government:
Government of India has recently launched Gold related schemes like gold monetisation scheme, Gold sovereign bond scheme.
Gold monetisation scheme works like a gold savings account. Individual has to deposit gold in banks which will earn interest on the deposit. Individual can invest any form of gold like jewels, coins, Bars.
Gold sovereign bond scheme is alternative investment for purchasing Physical gold. Individuals earn fixed interest rate of 2.5% on the initial investment. Upon maturity investors can redeem for cash or sell it on any stock exchange. Gold sovereign bond is held in demat form.
Gold Mutual Funds:
Gold Mutual Funds are scheme that mainly invest in gold ETF and gold related companies. Gold Mutual Funds do not invest in physical gold.Gold Mutual Funds can be purchased via systematic Investment Plans.
Mentotax recommends to hold 2 - 5% of gold in your portfolio. Diversification in various asset classes are always preferred.
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