Amid the Dhanteras and Diwali festival, gold remains a popular investment choice due to its capacity to provide financial security, especially in the face of economic fluctuations.
However, like any investment, it necessitates thoughtful consideration and strategic planning, as the cost of buying gold varies depending on the form of gold and your mode of payment
Gold coins and bars represent one of the most conventional methods to invest in this precious metal. For coins and bars the making charge is generally 8-16% along with a GST of 3 per cent.
Investing in gold jewellery and artefacts is more for consumption as acquiring physical gold comes with making charges as high as 10-40 per cent.
Gold ETFs are investment funds that closely track the price of gold. This type of investment is akin to buying stocks, where you can purchase and trade shares. It involves only brokerage fee when buying or selling. Does not involve making charges, resulting in cost savings.
Gold funds invest in gold ETFs and are sold by mutual funds. The Expense Ratio for the direct plan of the gold fund typically ranges up to 0.5 percent. Nevertheless, they prove to be more expensive compared to investing in gold ETFs, as you are responsible for covering the expenses of both gold ETFs and gold funds.
Digital gold permits electronic investment in gold with as low as Rs 1. Each purchase results in an equivalent amount of physical gold being stored by the company on your behalf. Digital gold has GST charges of 3 per cent along with a mark-up-of 2.5%to 3% on base price.
Gold futures and options are speculative investment instruments that grant the buyer the right, but not the obligation, to buy or sell gold at a specified price on a designated date. You are charged brokerage fees on buying and selling. For example: Zerodha charges 0.03% or Rs 20, whichever is lower on futures and flat Rs 20 per order on Options.
SGBs are securities denominated in grams of gold, which are issued by the RBI on behalf of the government. There is no GST added to the issue price and hence it is the cheapest way of buying gold. Moreover, If you buy online then prices get reduced by Rs 50 per gram for those who subscribe online and make the payment through digital mode.