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Gold Investment

Tips on Investing in Gold

Last Updated 01st Mar 2021

  • Invest in paper gold to save yourself from paying making charges, locker charges, and other value-added taxes.
  • As per financial experts, you should invest only 2%-5% of your investment portfolio in gold.
  • Before investing in gold, you must carefully examine the quality of gold.
  • The longer you hold on to your asset, the better profits you will earn.
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Gold Investment in India

Gold is one of the most preferred investments by people in India. High liquidity, safety, and inflation-beating capacity are its strong selling points. It works as a tool to tide over financial emergencies. There are many ways of owning gold – paper and physical. Gold in the form of coins, jewelry, and gold bars comes under physical gold. You can use gold Exchange-Traded Funds (ETFs) and Sovereign Gold Bonds (SGBs) for paper gold. There are also e-commerce websites where one can buy gold coins online to get the coins delivered at home.

You must keep a few things in mind before you invest in gold.

  • Prefer paper gold over physical gold: Most people prefer physical gold such as bars and jewellery over paper gold. But physical gold has a lot of problems when it comes to storage and safekeeping. On the other hand, Paper gold saves you from paying making charges, locker charges, and value-added taxes. It also makes transfer easy and safe.
  • Know how much to invest: You must know how much investment in gold should be made. It is suggested that 5% of your investment portfolio should be invested in gold. According to financial experts, someone with a stable and regular income should not put more than 2-5 per cent of their portfolios in the precious metal. Those who do not have a steady income shouldn’t put in more than 10 per cent.
  • Make early investments : The price of gold is bound to increase in the future, so your returns will be more than what you invested. But in case, if you decide to purchase gold some other time, you may have to invest more to get the same amount you could get for a much less price right now. Hence, keeping track of gold cost will help you determine the best time to invest in this precious metal.
  • Beware of scams: Before you spend your hard-earned money buying gold, make sure to pay utmost attention to the quality of gold you are investing in. There have been cases of counterfeit gold coins being sold.
  • Wait for returns: The longer you hold on to your asset, the better profits you will earn since the rate of gold is sure to rise soon.

How To Invest In Gold Market In India

  • Before investing in gold, make sure you know all the forms in which this precious metal is offered.
  • It is crucial to choose the form of gold in which you wish to invest. It could be either physical or paper gold. However, investing in paper or electronic gold is always a better idea.
  • The best time to invest in gold is when the price is low. This ensures a higher rate of return.
  • You should be sure of the amount of risk you are willing to take and dedicate a percentage of your investment portfolio accordingly.
  • Hold on to your asset as long as possible to get higher returns.
  • Make sure the quality of gold is excellent and be cautious of fraudulent investment scopes.
  • Do not pour in all your money and assets into the investment; choose your investment plan wisely.

Gold Investment In India – Good Or Bad?

Investing in gold is considered as a smart financial move in modern times. But one must keep it as a hedge against inflation instead of investing solely on gold. So when you invest in gold, make sure to consider all the points mentioned above to make a smart decision.

FAQs

Is gold a good investment?

Investment in Gold is considered a smart financial move as it has high liquidity, is deemed to be safe, and has an inflation-beating capacity. Thus it can be an excellent tool to tide over financial emergencies.

How do I start investing in gold?

There are different ways to invest in gold. You can own gold physically in the form of jewellery, coins, and gold bars, and you can also invest in gold as gold exchange-traded funds (ETFs) and sovereign gold bonds (SGBs). Before investing in gold, you must know about different investment methods, the right time of investment & how to invest in gold.

What is the best way to buy gold as an investment?

Some of the best ways to invest in gold are:

  • Buy Gold Coins, Bars or Bullion
  • Invest in gold stocks
  • Investment in Gold Exchange-Traded Funds (ETFs) and Sovereign Gold Bonds (SGBs)

Is it better to buy gold or gold stocks?

While Gold stocks are more liquid and thus have an advantage of easy trading, on the other hand, paper gold is more susceptible to market risk than physical gold. Thus, physical gold can hedge against the stock market and do well in a down market.


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